Procter & Gamble Company (PG)
Interest coverage
| Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 21,074,000 | 20,428,000 | 20,367,000 | 19,026,000 | 19,685,000 | 20,070,000 | 19,764,000 | 20,026,000 | 19,109,000 | 18,401,000 | 18,071,000 | 18,410,000 | 18,434,000 | 18,350,000 | 18,153,000 | 17,828,000 | 18,117,000 | 18,054,000 | 17,669,000 | 17,281,000 |
| Interest expense (ttm) | US$ in thousands | 907,000 | 915,000 | 931,000 | 939,000 | 926,000 | 946,000 | 935,000 | 858,000 | 756,000 | 631,000 | 518,000 | 453,000 | 439,000 | 441,000 | 438,000 | 475,000 | 502,000 | 542,000 | 536,000 | 493,000 |
| Interest coverage | 23.23 | 22.33 | 21.88 | 20.26 | 21.26 | 21.22 | 21.14 | 23.34 | 25.28 | 29.16 | 34.89 | 40.64 | 41.99 | 41.61 | 41.45 | 37.53 | 36.09 | 33.31 | 32.96 | 35.05 |
June 30, 2025 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $21,074,000K ÷ $907,000K
= 23.23
The interest coverage ratio for Procter & Gamble Company over the specified period reflects a generally strong capacity to meet interest expenses from operating earnings, albeit with a noticeable downward trend commencing in late 2022. Specifically, the ratio began at a high level of 35.05 times in September 2020 and peaked at 41.61 times in March 2022, indicating robust earnings relative to interest obligations during this period. This high level suggests ample earnings buffer to service debt and demonstrates solid financial stability.
However, beginning in the second half of 2022, there is a discernible decline in the interest coverage ratio. By September 2022, the ratio decreased to 40.64, and subsequently further down to 34.89 in December 2022. This downward trajectory continued into 2023 and beyond, with ratios reaching as low as 20.26 in September 2024. Despite this decline, the ratios remain positive and above the generally cautious threshold of 2 to 3 times, indicating that interest payments are still comfortably covered by operating earnings.
The gradual reduction in interest coverage suggests potential pressures on operating income or increased interest expenses, possibly due to operational or financial restructuring, shifting revenue dynamics, or increased leverage. Nonetheless, the ratios still demonstrate that Procter & Gamble maintains a prudent buffer above critical insolvency risk levels, supporting a view that its debt servicing capacity remains adequate but may warrant further monitoring for signs of stress.
Overall, the trend indicates a declining but still healthy ability to cover interest expenses, with the ratio stabilizing around the low 20s in recent periods, reflecting a possible recalibration of the company's financial leverage or operational earnings. This pattern underscores the importance of continued scrutiny of earnings stability and debt management to sustain this financial resilience.