Advanced Drainage Systems Inc (WMS)
Interest coverage
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 732,131 | 719,310 | 411,918 | 344,525 | -95,349 |
| Interest expense | US$ in thousands | 2,044 | 1,419 | 382 | 382 | 34,476 |
| Interest coverage | 358.19 | 506.91 | 1,078.32 | 901.90 | -2.77 |
March 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $732,131K ÷ $2,044K
= 358.19
The interest coverage ratio of Advanced Drainage Systems Inc has exhibited a general trend of improvement over the past five years. As of March 31, 2024, the interest coverage ratio stands at 358.19, reflecting the company's ability to cover its interest expenses by its operating income. This indicates a strong capacity to meet its interest obligations.
Looking back at the previous years, the interest coverage ratios have also been robust, with values of 506.91 in 2023 and 1,078.32 in 2022. These figures demonstrate a consistent ability to comfortably cover interest expenses over these years.
However, it is worth noting that the interest coverage ratio dipped in 2021 to 901.90, although still at a healthy level, unlike the negative value of -2.77 in 2020. The negative interest coverage ratio in 2020 suggests that the company's operating income was insufficient to cover its interest expenses during that period, which may have raised concerns about the company's financial stability.
Overall, the upward trend in Advanced Drainage Systems Inc's interest coverage ratio indicates positive financial health and the company's ability to manage its debt obligations effectively, with the most recent ratio in 2024 showing a significant improvement.