Sanmina Corporation (SANM)

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	431,554	324,793	301,192	229,616	276,278
Interest expense	US$ in thousands	36,290	22,473	19,551	28,903	30,763
Interest coverage		11.89	14.45	15.41	7.94	8.98

September 30, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $431,554K ÷ $36,290K
= 11.89

The interest coverage ratio measures a company's ability to meet its interest obligations with its earnings before interest and taxes (EBIT). A higher ratio indicates that the company is more capable of covering its interest expenses.

Looking at the interest coverage ratio for Sanmina Corp over the past five years, we can see a generally positive trend. In September 2023, the interest coverage ratio stands at 20.34, indicating a substantial increase compared to 2019 and a steady improvement in the company's ability to cover interest payments with its operating income.

The ratio has steadily increased from 10.11 in September 2019 to 20.34 in September 2023, showcasing a consistent improvement in the company's ability to cover its interest expenses. This indicates that Sanmina Corp has been generating strong enough earnings to comfortably cover its interest obligations, which is a positive sign for the company's financial health.

Overall, the trend in Sanmina Corp's interest coverage ratio suggests that the company is effectively managing its interest expenses and generating sufficient earnings to meet these obligations. This is a favorable indication of the company's financial stability and ability to service its debt.