STERIS plc (STE)

Interest coverage

		Mar 31, 2025	Mar 31, 2024	Mar 31, 2023	Mar 31, 2022	Mar 31, 2021
Earnings before interest and tax (EBIT)	US$ in thousands	—	847,161	788,222	456,293	581,088
Interest expense	US$ in thousands	86,261	144,351	110,835	89,593	37,180
Interest coverage		0.00	5.87	7.11	5.09	15.63

March 31, 2025 calculation

Interest coverage = EBIT ÷ Interest expense
= $—K ÷ $86,261K
= 0.00

The interest coverage ratio, a key financial metric used to evaluate a company's ability to cover its interest obligations with operating income, has shown some variability for STERIS plc over the past five years. As of March 31, 2021, the interest coverage ratio stood at a healthy level of 15.63, indicating the company's strong capacity to service its interest expenses with its operating earnings.

However, there was a significant decline in the interest coverage ratio by March 31, 2022, dropping to 4.51. This considerable decrease suggests that STERIS plc may have faced challenges in meeting its interest payments from operating profits alone during that period.

Subsequently, by March 31, 2023, the interest coverage ratio improved to 7.11, indicating a partial recovery in the company's ability to cover its interest costs. Still, the ratio remained below the level seen in 2021.

As of March 31, 2024, the interest coverage ratio for STERIS plc was 5.87, suggesting that the company continued to face some difficulty in comfortably meeting its interest obligations from operating income.

Lastly, a notable observation is that by March 31, 2025, the interest coverage ratio dropped to 0.00, strongly indicating that STERIS plc was unable to cover its interest expenses with its operating earnings during that period. This development raises concerns about the company's financial health and ability to meet its debt obligations.

In summary, the trend in STERIS plc's interest coverage ratio over the five-year period reflects fluctuations in its ability to service its interest payments with operating income, with notable declines and fluctuations in recent years, warranting further scrutiny and analysis of the company's financial position and debt management strategies.