Performance Food Group Co (PFGC)
Interest coverage
| Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 762,000 | 350,000 | 207,100 | -105,300 | 283,700 |
| Interest expense | US$ in thousands | 218,000 | 182,900 | 152,400 | 116,900 | 65,400 |
| Interest coverage | 3.50 | 1.91 | 1.36 | -0.90 | 4.34 |
June 30, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $762,000K ÷ $218,000K
= 3.50
Performance Food Group Co's interest coverage ratio has shown some fluctuations over the past five years. In FY 2023, the interest coverage ratio improved to 3.50, indicating that the company generated 3.50 times more operating income than it needed to cover its interest expenses. This signifies a positive development in the company's ability to meet its interest obligations from operating earnings.
In FY 2022, the interest coverage ratio was 1.91, indicating that the company's operating income was almost sufficient to cover its interest expenses. However, the ratio improved in FY 2023 compared to the previous year, reflecting a better ability to service its debt.
In FY 2021, the interest coverage ratio was 1.36, which indicates a relatively lower margin of safety in meeting interest payments. The ratio in FY 2021 was an improvement compared to FY 2020 when it was negative (-0.90). The negative interest coverage in FY 2020 indicates that the company's operating income was insufficient to cover its interest expenses, reflecting financial distress.
In FY 2019, the interest coverage ratio was strong at 4.34, indicating a healthy financial position where the company's operating income was significantly higher than its interest expenses.
Overall, the trend in Performance Food Group Co's interest coverage ratio shows improvement in recent years, signaling a better ability to meet its interest obligations from operating earnings. However, management should continue to monitor this ratio to ensure sustainable financial health.
Peer comparison
Jun 30, 2023