Smith AO Corporation (AOS)
Interest coverage
| 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 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 745,500 | 328,000 | 296,300 | 250,300 | 233,100 | 655,800 | 676,100 | 660,900 | 629,900 | 599,600 | 571,100 | 508,400 | 451,200 | 416,300 | 393,300 | 439,400 | 483,100 | 521,700 | 539,300 | 552,100 |
| Interest expense (ttm) | US$ in thousands | 12,000 | 14,300 | 14,300 | 11,900 | 9,400 | 7,400 | 6,000 | 4,800 | 4,300 | 3,900 | 4,500 | 6,100 | 7,300 | 8,800 | 10,300 | 11,200 | 11,000 | 10,300 | 9,200 | 8,100 |
| Interest coverage | 62.12 | 22.94 | 20.72 | 21.03 | 24.80 | 88.62 | 112.68 | 137.69 | 146.49 | 153.74 | 126.91 | 83.34 | 61.81 | 47.31 | 38.18 | 39.23 | 43.92 | 50.65 | 58.62 | 68.16 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $745,500K ÷ $12,000K
= 62.12
The interest coverage ratio for A.O. Smith Corp. has shown a downward trend over the quarters, indicating a potential deterioration in the company's ability to cover its interest expenses with its operating income. The interest coverage ratio, which measures the company's ability to meet its interest obligations, decreased from 135.25 in Q1 2022 to 63.12 in Q4 2023.
This declining trend suggests that A.O. Smith Corp. may be facing challenges in generating sufficient operating income to cover its interest expenses. A lower interest coverage ratio could indicate increased financial risk and may raise concerns regarding the company's ability to service its debt obligations in the long run.
It is essential for investors and stakeholders to closely monitor A.O. Smith Corp.'s interest coverage ratio to assess its financial health and sustainability in meeting its debt obligations.
Peer comparison
Dec 31, 2023