Papa John's International Inc (PZZA)

Interest coverage

		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	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	147,142	140,806	128,399	132,391	109,030	110,965	130,081	135,814	168,241	149,774	135,746	121,643	90,253	70,423	50,801	34,498	24,535	17,341	-1,756	8,923
Interest expense (ttm)	US$ in thousands	43,682	38,968	35,213	30,019	25,262	24,516	20,872	18,440	17,823	15,372	15,029	15,007	15,327	31,715	28,187	28,832	31,141	18,641	24,496	25,886
Interest coverage		3.37	3.61	3.65	4.41	4.32	4.53	6.23	7.37	9.44	9.74	9.03	8.11	5.89	2.22	1.80	1.20	0.79	0.93	-0.07	0.34

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $147,142K ÷ $43,682K
= 3.37

The interest coverage ratio for Papa John's International, Inc. has shown a decreasing trend over the past quarters, starting at a high of 7.41 in Q1 2022 and gradually declining to 3.38 in Q4 2023. This indicates that the company's ability to cover its interest expenses with its operating income has weakened. While the ratio fluctuated between 3.38 and 4.79 in the last year, it remains above 1, suggesting that the company is still generating enough operating income to cover its interest payments. However, investors and creditors may view the declining trend as a cause for concern, as a lower interest coverage ratio can signify higher financial risk for the company. It will be important for Papa John's to closely monitor and potentially improve this ratio in the future to ensure its financial stability and ability to meet its debt obligations.