Warner Music Group (WMG)
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 | 790,000 | 714,000 | 609,000 | -229,000 | 356,000 |
| Interest expense | US$ in thousands | 157,000 | 125,000 | 119,000 | 127,000 | 142,000 |
| Interest coverage | 5.03 | 5.71 | 5.12 | -1.80 | 2.51 |
September 30, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $790,000K ÷ $157,000K
= 5.03
Warner Music Group's interest coverage ratio has shown stability and improvement over the past five years. The ratio has been consistently above 1, indicating that the company's operating income is sufficient to cover its interest expenses. In particular, the interest coverage ratio was strong in 2022 and 2023, at 5.71 and 5.03 respectively, suggesting that Warner Music Group has a comfortable margin of safety when it comes to meeting its interest obligations.
The significant improvement from a negative value in 2020 to positive values in subsequent years demonstrates that the company was able to enhance its ability to cover interest payments using its operating income. This indicates a positive trend in the company's financial health and ability to service its debt obligations. However, it would be important for Warner Music Group to continue monitoring its interest coverage ratio to ensure it remains at a sustainable level and is not adversely impacted by changing market conditions or financial performance.
Peer comparison
Sep 30, 2023