Plexus Corp (PLXS)

Interest coverage

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Earnings before interest and tax (EBIT)	US$ in thousands	192,555	174,161	174,664	151,559	138,808
Interest expense	US$ in thousands	31,542	15,858	14,253	16,162	12,853
Interest coverage		6.10	10.98	12.25	9.38	10.80

September 30, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $192,555K ÷ $31,542K
= 6.10

The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. A higher interest coverage ratio indicates that the company is more capable of meeting its interest obligations.

Looking at Plexus Corp.'s interest coverage ratios over the past five years, we observe a consistent level of coverage above 7. This suggests that the company has generally been able to comfortably meet its interest payments from its operating income.

The downward trend in the interest coverage ratio from 2019 to 2023 is worth noting. Although the ratios remain above 7, the declining trend indicates a decrease in the company's ability to cover its interest expenses from its operating income. This could be a sign of increased interest expenses relative to operating income, which warrants further investigation.

Overall, while Plexus Corp. has maintained a relatively healthy interest coverage ratio, the recent decline raises potential concerns about its ability to cover interest expenses in the future, and thus merits attention from stakeholders.