Tyson Foods Inc (TSN)
Interest coverage
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | -395,000 | 4,410,000 | 4,396,000 | 3,008,000 | 2,770,000 |
| Interest expense | US$ in thousands | 355,000 | 365,000 | 428,000 | 485,000 | 462,000 |
| Interest coverage | -1.11 | 12.08 | 10.27 | 6.20 | 6.00 |
September 30, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $-395,000K ÷ $355,000K
= -1.11
The interest coverage ratio measures a company's ability to pay interest expenses on its outstanding debt. A higher ratio indicates that the company is more capable of servicing its debt obligations.
Looking at the trend in Tyson Foods, Inc.'s interest coverage ratio over the past five years, there is a significant fluctuation from 2019 to 2023. In 2019, the interest coverage ratio was 6.27, which increased to 6.33 in 2020. However, there was a substantial drop in 2021, with the ratio declining to 1.19. This sharp decline might indicate potential difficulties in meeting interest obligations or increased borrowing.
The ratio then experienced a substantial recovery in 2022, reaching 12.67. This sharp increase reflects a significant improvement in the company's ability to cover its interest expenses, potentially due to improved operational performance or a reduction in interest costs. However, the interest coverage ratio fell again in 2023 to 1.19, indicating a potential return to a situation where the company may struggle to cover its interest expenses.
Such fluctuations in the interest coverage ratio raise concerns about the company's financial stability and ability to manage its debt effectively. Investors and stakeholders should further investigate the reasons behind these fluctuations to assess the company's financial health and its ability to handle debt obligations in the future.
Peer comparison
Sep 30, 2023