Allegion PLC (ALLE)
Interest coverage
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 800,800 | 710,300 | 590,400 | 574,200 | 416,500 |
| Interest expense | US$ in thousands | 102,000 | 93,100 | 75,900 | 50,200 | 51,100 |
| Interest coverage | 7.85 | 7.63 | 7.78 | 11.44 | 8.15 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $800,800K ÷ $102,000K
= 7.85
Interest coverage is a key financial ratio that indicates a company's ability to meet its interest obligations from its operating income. For Allegion PLC, the interest coverage ratio has fluctuated over the past five years.
In December 2020, the interest coverage ratio stood at 8.15, indicating that Allegion's operating income was able to cover its interest expenses 8.15 times over. This ratio improved significantly by December 2021, reaching 11.44, suggesting a stronger ability to service interest payments.
However, in the subsequent years, the interest coverage ratio for Allegion declined. In December 2022, the ratio dropped to 7.78, and further decreased to 7.63 by December 2023. In December 2024, the ratio slightly increased to 7.85 but remained below the levels seen in 2021.
Overall, the trend in Allegion's interest coverage ratio shows a notable improvement from 2020 to 2021, followed by a gradual decline in subsequent years. It is important for investors and creditors to monitor this ratio to assess the company's financial health and its ability to meet its debt obligations.