Parker-Hannifin Corporation (PH)

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	4,515,697	4,450,927	4,403,947	4,134,481	4,101,107	4,056,247	3,920,841	3,587,097	3,253,150	2,382,218	1,971,034	1,859,139	1,868,972	2,397,590	2,558,496	2,647,823	2,496,166	2,223,227	2,100,053	1,796,808
Interest expense (ttm)	US$ in thousands	408,835	429,101	456,891	485,118	506,495	544,405	572,666	590,568	573,894	487,988	399,267	313,696	255,252	244,240	241,798	243,428	250,036	264,327	284,262	304,163
Interest coverage		11.05	10.37	9.64	8.52	8.10	7.45	6.85	6.07	5.67	4.88	4.94	5.93	7.32	9.82	10.58	10.88	9.98	8.41	7.39	5.91

June 30, 2025 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $4,515,697K ÷ $408,835K
= 11.05

The interest coverage ratio for Parker-Hannifin Corporation demonstrates a general trend of improvement over the analyzed period, reflecting enhanced ability to meet interest obligations with operating earnings. Starting at 5.91 times as of September 30, 2020, the ratio experienced a notable upward trajectory, reaching a peak of approximately 11.05 times by June 30, 2025.

During the initial phases, the ratio increased steadily, surpassing 7.0 in late 2020 and continuing to grow through 2021, peaking consistently above 10.0 times in late 2021 and early 2022. This indicates a substantial improvement in the company's capacity to generate sufficient earnings before interest and taxes (EBIT) to cover its interest expenses.

Subsequently, the ratio declined to below 6.0 by late 2022, reaching a low of 4.88 times in March 2023. Despite this decline, the ratio persisted above the conservative benchmark of 3.0, suggesting that the company maintained a satisfactory margin of safety in covering interest costs. After this period, a recovery was observed starting in mid-2023, with ratios climbing back toward 8.5 times by December 2024, and projected to continue ascending through mid-2025, reaching approximately 11.05 times.

Overall, the interest coverage ratio indicates that Parker-Hannifin’s earnings ability to cover interest expenses improved over the analyzed period. The period of decline in 2022-2023 may signal increased interest expense or decreased earnings, but the subsequent upward trend suggests a positive outlook for the company’s financial stability and its capacity to meet debt obligations comfortably moving forward.