Parker-Hannifin Corporation (PH)

Interest coverage

		Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Earnings before interest and tax (EBIT)	US$ in thousands	4,516,000	4,101,100	3,253,560	1,869,480	2,496,990
Interest expense	US$ in thousands	409,000	506,495	573,894	255,252	250,036
Interest coverage		11.04	8.10	5.67	7.32	9.99

June 30, 2025 calculation

Interest coverage = EBIT ÷ Interest expense
= $4,516,000K ÷ $409,000K
= 11.04

The interest coverage ratios for Parker-Hannifin Corporation over the specified period demonstrate fluctuations indicative of the company's changing ability to meet its interest obligations from its operating earnings. As of June 30, 2021, the ratio stood at 9.99, reflecting a robust capacity to cover interest expenses nearly ten times, which suggests strong financial health and low risk of interest default.

However, by June 30, 2022, the ratio declined to 7.32, indicating a decrease in earnings relative to interest expenses, though it remained comfortably above critical thresholds that typically signal financial stability. The further decrease to 5.67 by June 30, 2023, points to a continued reduction in coverage, potentially reflecting increased interest costs, decreased earnings, or both, which warrants monitoring for signs of financial strain.

Subsequently, there was a notable improvement in the ratio to 8.10 as of June 30, 2024, suggesting a recovery in earnings or reduction in interest obligations. This upward movement restores a more comfortable level of coverage, closer to historical norms observed in 2021.

Looking ahead, the projected ratio of 11.04 for June 30, 2025, indicates a significant strengthening in the company's ability to service its interest expenses. Such an increase enhances confidence in the company's financial stability and suggests effective management of earnings and debt levels going forward.

Overall, the trend of Parker-Hannifin’s interest coverage ratios shows a period of initial strength, a dip in 2022 and 2023, followed by a recovery and projected improvement. This pattern underscores the importance of continuing to monitor earnings and interest obligations to ensure sustained financial resilience.