RBC Bearings Incorporated (RBC)
Interest coverage
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 340,500 | 286,400 | 120,200 | 114,600 | 156,024 |
| Interest expense | US$ in thousands | 78,700 | 76,700 | 41,500 | 1,400 | 1,885 |
| Interest coverage | 4.33 | 3.73 | 2.90 | 81.86 | 82.77 |
March 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $340,500K ÷ $78,700K
= 4.33
Interest coverage measures a company's ability to meet its interest obligations using its earnings before interest and taxes (EBIT). A higher interest coverage ratio indicates the company is more capable of servicing its debt obligations.
The interest coverage ratio for RBC Bearings Incorporated has shown fluctuations over the past five years. In 2024, the ratio improved to 4.33 from 3.73 in 2023, indicating that the company's EBIT was 4.33 times its interest expenses. This suggests that RBC Bearings' ability to cover its interest payments has strengthened, providing a buffer against potential financial challenges.
The significant increase in interest coverage from 2021 to 2022, where the ratio spiked from 2.90 to 81.86, may indicate an anomaly, possibly due to an extraordinary increase in EBIT or a decrease in interest expenses.
Overall, the upward trend in the interest coverage ratio for RBC Bearings over the past two years reflects a positive sign of the company's improving financial health and capacity to service its debt obligations. However, it is essential to further investigate the reasons behind the fluctuations in the ratio to gain a deeper understanding of the company's financial performance and risk profile.
Peer comparison
Mar 31, 2024