Simply Good Foods Co (SMPL)

Interest coverage

		Feb 24, 2024	Nov 25, 2023	Aug 26, 2023	May 27, 2023	Feb 25, 2023	Nov 26, 2022	Aug 27, 2022	May 28, 2022	Feb 26, 2022	Nov 27, 2021	Aug 28, 2021	May 29, 2021	Feb 27, 2021	Nov 28, 2020	Aug 29, 2020	May 30, 2020	Feb 29, 2020	Nov 30, 2019	Aug 31, 2019	May 25, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	212,738	206,291	205,760	192,693	193,266	184,715	172,450	164,037	137,956	93,064	112,417	52,810	86,003	159,721	111,777	101,886	53,276	10,557	21,945	72,284
Interest expense (ttm)	US$ in thousands	26,146	29,047	30,068	28,554	25,786	22,565	21,881	23,733	26,837	29,556	31,557	33,283	33,622	36,216	32,813	27,476	22,580	15,335	13,627	13,415
Interest coverage		8.14	7.10	6.84	6.75	7.49	8.19	7.88	6.91	5.14	3.15	3.56	1.59	2.56	4.41	3.41	3.71	2.36	0.69	1.61	5.39

February 24, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $212,738K ÷ $26,146K
= 8.14

Interest coverage is a financial ratio that measures a company's ability to cover its interest expenses with its operating profits. A higher interest coverage ratio indicates that the company is more capable of meeting its interest obligations.

Analyzing the interest coverage ratio of Simply Good Foods Co over time, we can see fluctuations in the ratio. Generally, the company has maintained a healthy interest coverage ratio above 1, indicating that it has generated enough operating profits to cover its interest expenses.

The interest coverage ratio of Simply Good Foods Co has shown some variability, with fluctuations between 0.69 and 8.19 over the periods analyzed. In recent quarters, the interest coverage ratio has been relatively stable, ranging between 6.75 and 8.19, reflecting the company's consistent ability to cover its interest expenses comfortably.

However, it is worth noting that there have been periods, such as in May 2021 and August 2021, where the interest coverage ratio dropped significantly, indicating a potential decrease in the company's ability to cover its interest expenses with operating profits. This could be a point of concern for investors and stakeholders.

Overall, the interest coverage ratio of Simply Good Foods Co suggests that the company has generally been able to comfortably cover its interest expenses with its operating profits, but there have been periods of lower coverage that may require further investigation and monitoring.