Vestis Corporation (VSTS)
Interest coverage
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 158,593 | 217,909 | 192,243 | 96,239 | 149,720 |
| Interest expense | US$ in thousands | 96,800 | 10 | 2,284 | — | 206 |
| Interest coverage | 1.64 | 21,790.90 | 84.17 | — | 726.80 |
September 30, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $158,593K ÷ $96,800K
= 1.64
The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt. A higher interest coverage ratio indicates a company is more capable of meeting its interest obligations.
Looking at Vestis Corporation's interest coverage ratios over the past five years, we observe a significant fluctuation. In 2020, the interest coverage ratio of 726.80 indicates a robust ability to cover interest payments. However, in 2021, the interest coverage ratio is not available, which could suggest potential issues in servicing the interest expenses properly.
In 2022, the interest coverage ratio improved to 84.17, indicating a recovery in the company's ability to cover interest payments. Subsequently, in 2023, there was a substantial increase in the interest coverage ratio to 21,790.90, reflecting a significant improvement and a very strong ability to cover interest obligations.
In the most recent year, 2024, the interest coverage ratio decreased to 1.64, which may raise concerns about the company's ability to cover its interest expenses using its operating income. This significant decline in the interest coverage ratio from the previous year signals a potential deterioration in Vestis Corporation's financial health in terms of covering its interest costs.
Overall, the varying trend in Vestis Corporation's interest coverage ratios suggests fluctuations in the company's ability to meet its interest obligations over the years, with a notable decline in 2024 raising potential red flags regarding its financial solvency. Further analysis of the company's financial performance and debt management practices is recommended to assess the underlying reasons for these fluctuations and to determine the company's future financial stability.
Peer comparison
Sep 30, 2024