Western Digital Corporation (WDC)

Interest coverage

		Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Earnings before interest and tax (EBIT)	US$ in thousands	1,462,000	-244,000	-1,228,000	2,667,000	1,109,000
Interest expense	US$ in thousands	332,000	417,000	312,000	304,000	326,000
Interest coverage		4.40	-0.59	-3.94	8.77	3.40

June 30, 2025 calculation

Interest coverage = EBIT ÷ Interest expense
= $1,462,000K ÷ $332,000K
= 4.40

The interest coverage ratio for Western Digital Corporation over the observed period indicates significant fluctuations, reflecting changes in the company’s ability to meet interest obligations from its earnings before interest and taxes (EBIT).

As of June 30, 2021, the interest coverage ratio was 3.40, suggesting the company was comfortably able to cover its interest expenses approximately 3.4 times with its EBIT, indicating a healthy financial position at that time. This ratio significantly increased to 8.77 by June 30, 2022, implying a notable improvement in earnings relative to interest obligations, which enhanced the company's interest coverage capacity and indicated increased financial stability during that period.

However, by June 30, 2023, the ratio declined sharply into negative territory at -3.94, signaling that EBIT was insufficient to cover interest expenses and that the company was potentially experiencing operating losses or substantial interest costs exceeding its earnings. This marked a severe deterioration in the ability to service debt through operating income.

The negative trend persisted into June 30, 2024, with a ratio of -0.59, although it showed some slight improvement, remaining below zero. This suggests continued challenges in generating adequate earnings to cover interest commitments, although the situation appears slightly less dire than the previous year.

By June 30, 2025, the interest coverage ratio rebounded to 4.40, indicating a significant recovery in the company's ability to cover interest expenses comfortably once again. This positive turnaround suggests an improvement in operational profitability or reductions in interest expenses, restoring a more sustainable financial position.

Overall, the pattern reflects periods of both strong coverage and acute financial stress, with the most recent figures indicating a return to a healthier interest coverage level. The volatility underscores the importance of ongoing financial performance analysis and prudent management of earnings and debt levels to ensure sustained interest payment capacity.