Progress Software Corporation (PRGS)

Interest coverage

		Nov 30, 2023	Nov 30, 2022	Nov 30, 2021	Nov 30, 2020	Nov 30, 2019
Earnings before interest and tax (EBIT)	US$ in thousands	110,437	133,045	115,579	106,805	38,408
Interest expense	US$ in thousands	30,780	15,790	20,045	10,170	9,913
Interest coverage		3.59	8.43	5.77	10.50	3.87

November 30, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $110,437K ÷ $30,780K
= 3.59

The interest coverage ratio measures a company's ability to meet its interest obligations on outstanding debt. The table provides the interest coverage ratios for Progress Software Corp. over the past five years.

The interest coverage ratio has shown some fluctuation over the period, ranging from a low of 4.22 in 2023 to a high of 11.53 in 2020. This indicates that the company's ability to cover its interest expenses from its earnings has varied. A higher ratio suggests a greater ability to meet interest payments from operating income, indicating lower financial risk.

In 2023, the interest coverage ratio decreased to 4.22, signaling that the company's ability to cover interest expenses with operating income decreased. This may raise concerns about the company's ability to handle its debt obligations.

On the other hand, the higher ratios in 2020 and 2022, at 11.53 and 8.07 respectively, indicate a stronger ability to cover interest payments. This implies a lower risk of default on outstanding debt.

Overall, the trend of the interest coverage ratio for Progress Software Corp. suggests some variability in its ability to cover interest expenses, emphasizing the importance of monitoring the company's financial health and debt management in the future.