JM Smucker Company (SJM)
Interest coverage
| Apr 30, 2024 | Jan 31, 2024 | Oct 31, 2023 | Jul 31, 2023 | Apr 30, 2023 | Jan 31, 2023 | Oct 31, 2022 | Jul 31, 2022 | Apr 30, 2022 | Jan 31, 2022 | Oct 31, 2021 | Jul 31, 2021 | Apr 30, 2021 | Jan 31, 2021 | Oct 31, 2020 | Jul 31, 2020 | Apr 30, 2020 | Jan 31, 2020 | Oct 31, 2019 | Jul 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 1,305,800 | 266,300 | 286,800 | 281,300 | 157,500 | 1,093,000 | 925,700 | 944,100 | 1,023,800 | 960,500 | 1,216,100 | 1,285,100 | 1,386,800 | 1,494,800 | 1,377,600 | 1,326,600 | 1,223,100 | 1,030,000 | 958,600 | 959,300 |
| Interest expense (ttm) | US$ in thousands | 600 | 400 | 400 | 200 | 100 | 100 | 0 | 100 | 100 | 100 | 100 | 0 | 100 | 100 | 200 | 200 | 200 | 49,300 | 100,800 | 154,400 |
| Interest coverage | 2,176.33 | 665.75 | 717.00 | 1,406.50 | 1,575.00 | 10,930.00 | — | 9,441.00 | 10,238.00 | 9,605.00 | 12,161.00 | — | 13,868.00 | 14,948.00 | 6,888.00 | 6,633.00 | 6,115.50 | 20.89 | 9.51 | 6.21 |
April 30, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,305,800K ÷ $600K
= 2,176.33
The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. A higher interest coverage ratio indicates a company's greater ability to meet its interest obligations.
Analyzing the interest coverage ratio of JM Smucker Company over the provided period, we observe significant fluctuations. The ratio was extremely high in certain periods, such as Jan 31, 2023, and Apr 30, 2023, indicating a strong ability to cover interest expenses. These periods may suggest that the company had substantial operating income relative to its interest obligations.
However, there were instances when the interest coverage ratio decreased notably, such as in Apr 30, 2020, and Jul 31, 2019, where the ratio was considerably lower. This could indicate lower operating income relative to interest expenses during those periods, potentially signaling a strain on the company's ability to meet interest obligations.
Overall, the fluctuating nature of JM Smucker Company's interest coverage ratio over the provided period warrants further investigation into the factors influencing these variations. Investors and stakeholders may want to closely monitor the company's financial performance and capital structure to assess its ability to manage debt and interest payments effectively.