Paychex Inc (PAYX)
Interest coverage
| May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 2,174,100 | 2,033,100 | 1,840,000 | 1,460,700 | 1,460,500 |
| Interest expense | US$ in thousands | 37,300 | 36,700 | 36,600 | 35,800 | 38,800 |
| Interest coverage | 58.29 | 55.40 | 50.27 | 40.80 | 37.64 |
May 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $2,174,100K ÷ $37,300K
= 58.29
Paychex Inc's interest coverage ratio has shown a consistent upward trend over the past five years, indicating the company's improving ability to meet its interest obligations using its earnings. The ratio has increased from 37.64 in May 2020 to 58.29 in May 2024. This improvement suggests that Paychex Inc's earnings are sufficiently covering its interest expenses, providing a buffer against potential financial distress. Overall, the increasing trend in interest coverage reflects positively on the company's financial health and ability to service its debt obligations.