JM Smucker Company (SJM)
Interest coverage
| Apr 30, 2024 | Apr 30, 2023 | Apr 30, 2022 | Apr 30, 2021 | Apr 30, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 1,305,800 | 157,500 | 1,023,800 | 1,386,800 | 1,223,100 |
| Interest expense | US$ in thousands | 600 | 100 | 100 | 100 | 200 |
| Interest coverage | 2,176.33 | 1,575.00 | 10,238.00 | 13,868.00 | 6,115.50 |
April 30, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,305,800K ÷ $600K
= 2,176.33
The interest coverage ratio measures a company's ability to meet its interest obligations with its operating income. Higher ratios indicate a stronger ability to cover interest expenses.
Looking at JM Smucker Company's interest coverage ratio over the past five years, we observe significant fluctuations. In April 2020, the interest coverage ratio was 6,115.50, indicating a robust ability to cover interest payments. However, this ratio decreased notably in the following years, with values of 13,868.00 in 2021, 10,238.00 in 2022, and 1,575.00 in 2023. These declining trends suggest a potential decrease in the company's ability to cover interest expenses with operating income during these years.
Interestingly, in April 2024, JM Smucker Company's interest coverage ratio surged significantly to 2,176.33, indicating a notable improvement compared to the previous year. This could be a positive sign of the company's strengthened ability to handle interest payments in the most recent period.
Overall, while JM Smucker Company experienced fluctuations in its interest coverage ratio over the past five years, the substantial increase in the ratio in April 2024 suggests an improvement in the company's ability to cover interest expenses with its operating income. Investors and stakeholders may monitor future financial performance to see if this positive trend can be sustained.