Western Digital Corporation (WDC)

Interest coverage

		Jun 30, 2025	Mar 31, 2025	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	1,462,000	1,859,000	2,054,000	1,067,000	-244,000	-1,090,000	-1,819,000	-1,974,000	-1,208,000	44,000	1,011,000	2,046,000	2,660,000	2,712,000	2,425,000	1,889,000	1,184,000	722,000	646,000	512,000
Interest expense (ttm)	US$ in thousands	352,000	388,000	405,000	418,000	417,000	403,000	375,000	340,000	312,000	298,000	293,000	296,000	304,000	309,000	315,000	320,000	326,000	333,000	351,000	375,000
Interest coverage		4.15	4.79	5.07	2.55	-0.59	-2.70	-4.85	-5.81	-3.87	0.15	3.45	6.91	8.75	8.78	7.70	5.90	3.63	2.17	1.84	1.37

June 30, 2025 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,462,000K ÷ $352,000K
= 4.15

The interest coverage ratios of Western Digital Corporation have exhibited significant fluctuations over the period provided, indicating notable changes in the company's ability to meet its interest obligations through its earnings before interest and taxes (EBIT).

From September 30, 2020, to December 31, 2021, the company's interest coverage improved markedly, rising from 1.37 to 7.70. This trend suggests a strengthening financial position, with the company generating sufficient EBIT to comfortably cover its interest expenses. The ratio peaked at 8.78 on March 31, 2022, reflecting robust earnings relative to interest obligations.

However, a downward trend commenced thereafter. By September 30, 2022, the ratio declined to 6.91, and further diminished to 3.45 by December 31, 2022, indicating a weakening in the company's capacity to cover interest costs. The deterioration continued sharply into 2023, with the ratio plummeting to 0.15 on March 31, 2023, signaling that EBIT was insufficient to cover interest expenses, and suggesting an acute financial strain.

Subsequently, the interest coverage ratio turned negative, registering at -3.87 on June 30, 2023, and further decreasing to -5.81 on September 30, 2023. Negative ratios imply that EBIT was negative, meaning the company incurred losses before interest and taxes, and thus, was unable to meet its interest obligations from operational earnings. This period reflects a critical financial distress.

In the subsequent quarters, partial recovery is observed. The ratio improved to -4.85 by December 31, 2023, and further to -2.70 by March 31, 2024. The trend turned positive again by the September 30, 2024, quarter, with a ratio of 2.55, indicating a return to EBIT levels sufficient to cover interest expenses. The upward trajectory continued into 2025, reaching 4.79 by March 31, 2025, and 2.68 by June 30, 2025, demonstrating a significant recovery in the company's ability to service interest payments.

Overall, the interest coverage ratio demonstrates a cycle of initial strengthening, subsequent decline into financial distress, and a notable recovery in recent periods. The data indicates periods of financial strain where interest expenses exceeded operational earnings, followed by improvements that suggest an ongoing effort toward stabilization and improved profitability.