Vestis Corporation (VSTS)
Interest coverage
| Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | ||
|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 157,951 | 240,436 | 268,593 | 274,121 | 270,896 | 185,214 | 176,421 |
| Interest expense (ttm) | US$ in thousands | 161,489 | 152,617 | 182,805 | 148,092 | 117,317 | 145,981 | 115,361 |
| Interest coverage | 0.98 | 1.58 | 1.47 | 1.85 | 2.31 | 1.27 | 1.53 |
September 30, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $157,951K ÷ $161,489K
= 0.98
The interest coverage ratio measures a company's ability to meet its interest obligations with its operating income. A higher ratio indicates a stronger ability to pay interest expenses.
In the case of Vestis Corporation, the interest coverage ratio has been fluctuating over the past seven quarters. In the most recent quarter, ending September 30, 2024, the interest coverage ratio was 0.98, indicating that the company's operating income was just enough to cover its interest expenses. This is a concerning sign as it suggests a potential strain on the company's ability to meet its interest obligations.
Looking back over the previous quarters, the trend shows some variability in the interest coverage ratio. The highest ratio was 2.31, recorded in the quarter ending September 30, 2023, indicating a stronger ability to cover interest expenses during that period. However, there were also quarters where the ratio was lower, such as the most recent quarter, indicating a less favorable financial position in terms of interest coverage.
Overall, the trend in Vestis Corporation's interest coverage ratio suggests some inconsistency and potential challenges in meeting interest obligations with operating income. It would be important for the company to closely monitor and manage its financial performance to ensure it can maintain a healthy interest coverage ratio in the future.
Peer comparison
Sep 30, 2024