Simply Good Foods Co (SMPL)

Interest coverage

		Aug 31, 2024	May 25, 2024	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
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	209,691	217,687	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
Interest expense (ttm)	US$ in thousands	26,029	23,525	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
Interest coverage		8.06	9.25	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

August 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $209,691K ÷ $26,029K
= 8.06

The interest coverage ratio of Simply Good Foods Co fluctuated over the past few years, ranging from a low of 0.69 in November 2019 to a high of 9.25 in May 2024. A higher interest coverage ratio indicates that the company is more capable of meeting its interest obligations from its operating income.

The downward trend in the interest coverage ratio from 2019 to 2021 may suggest potential financial stress or increased borrowing costs for the company. However, there was a notable improvement in the ratio in 2022 and 2023, indicating a better ability to cover interest expenses.

Overall, it is crucial for Simply Good Foods Co to maintain a healthy interest coverage ratio to demonstrate its financial strength and ability to service its debt obligations. An upward trend in this ratio would be favorable, providing a positive signal to investors and creditors regarding the company's financial health and stability.