Sanmina Corporation (SANM)

Interest coverage

		Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	335,494	431,554	324,793	301,192	229,616
Interest expense	US$ in thousands	29,183	36,290	22,473	19,551	28,903
Interest coverage		11.50	11.89	14.45	15.41	7.94

September 30, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $335,494K ÷ $29,183K
= 11.50

The interest coverage ratio measures a company's ability to pay interest expenses on its outstanding debt using its operating income. A higher interest coverage ratio indicates that the company is more capable of servicing its debt.

Analyzing Sanmina Corporation's interest coverage over the past five years, we can observe a relatively stable and healthy trend. The interest coverage ratios for the years ending on September 30, 2020 to 2022 were consistently above 10, reflecting a strong ability to cover interest payments with operating income.

In particular, there was a notable increase in the interest coverage ratio from 2020 to 2021, which suggests improved financial health and a stronger ability to service debt obligations. However, there was a slight decline in the interest coverage ratio in the most recent year ending on September 30, 2023, which could potentially indicate a slight decrease in earnings relative to interest expenses.

Overall, Sanmina Corporation's interest coverage ratios demonstrate a generally stable and satisfactory ability to meet interest obligations over the past five years, indicating a sound financial position in terms of servicing debt.