Allegion PLC (ALLE)
Interest coverage
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 710,100 | 590,100 | 573,900 | 416,300 | 530,900 |
| Interest expense | US$ in thousands | 93,100 | 75,900 | 50,200 | 51,100 | 56,000 |
| Interest coverage | 7.63 | 7.77 | 11.43 | 8.15 | 9.48 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $710,100K ÷ $93,100K
= 7.63
Allegion plc's interest coverage ratio has shown a relatively stable trend over the past five years, averaging around 9.64. The interest coverage ratio indicates the company's ability to meet its interest obligations with its operating income. Higher values of the interest coverage ratio, such as those exhibited by Allegion plc, signify a company's strong capacity to cover interest expenses with its earnings.
Allegion's interest coverage ratio peaked in 2021 at 10.78 before slightly declining to 8.30 in 2023. Despite this decrease, the ratio remains comfortably above 1, indicating that the company's operating income is sufficient to cover its interest payments by more than eight times.
Overall, Allegion plc's interest coverage ratios reflect a healthy financial position, as the company consistently generates ample operating income to meet its interest obligations. This suggests that Allegion plc is effectively managing its interest-bearing debt and is less vulnerable to financial distress due to interest payment constraints.