Tetra Tech Inc (TTEK)
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 | 358,113 | 340,446 | 278,701 | 241,091 | 188,762 |
| Interest expense | US$ in thousands | 52,435 | 13,364 | 12,748 | 14,475 | 15,358 |
| Interest coverage | 6.83 | 25.47 | 21.86 | 16.66 | 12.29 |
September 30, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $358,113K ÷ $52,435K
= 6.83
The interest coverage ratio measures a company's ability to meet its interest expenses with its operating income. A higher interest coverage ratio indicates that the company is better able to cover its interest payments.
For Tetra Tech Inc, we observe a fluctuating trend in the interest coverage ratio over the past five years. In 2023, the interest coverage ratio is 6.83, which suggests the company's operating income is 6.83 times its interest expense for the year. This indicates a lower level of ability to cover interest payments compared to the previous year.
In 2023, the interest coverage ratio decreased from the exceptionally high levels seen in 2022 (25.47) and 2021 (21.86). This significant decrease may raise concerns about the company's ability to comfortably meet its interest obligations. However, it is important to consider the reasons behind this decline, such as changes in interest rates, operating income, or debt levels.
Looking back to 2020 and 2019, we see a continued improvement in Tetra Tech's ability to cover interest expenses, with ratios of 16.66 and 12.29, respectively. This demonstrates a generally positive trend in the company's financial health over the past five years.
Overall, while the 2023 interest coverage ratio for Tetra Tech Inc has declined compared to the previous years, further analysis is necessary to understand the underlying factors contributing to this trend and to assess the company's overall financial position.
Peer comparison
Sep 30, 2023