Arrow Electronics Inc (ARW)

To analyze Arrow Electronics Inc interest coverage over the years, we look at the data provided. The interest coverage ratio measures the company's ability to pay interest on its outstanding debt with its earnings before interest and taxes (EBIT).

In 2020, the interest coverage ratio was 6.52, indicating that Arrow Electronics had earnings 6.52 times higher than its interest expenses. This suggests a moderate ability to cover its interest obligations at that time.

By the end of 2021, the interest coverage ratio improved significantly to 11.82, showing a stronger ability to meet interest payments with earnings. This indicates a positive trend in the company's financial health, as it was able to generate more earnings relative to its interest expenses.

In 2022, although the interest coverage ratio decreased slightly to 11.14, it remained at a relatively high level, suggesting continued solid performance in managing interest obligations.

However, by the end of 2023, the interest coverage ratio dropped to 4.48, indicating a decline in the company's ability to cover interest expenses with earnings. This could be a cause for concern as it may signal increased financial risk or lower profitability.

In 2024, the interest coverage ratio further decreased to 2.85, reflecting a more significant challenge for Arrow Electronics in meeting its interest payments with earnings. A declining interest coverage ratio over time may indicate potential financial stress or inefficiencies in managing debt.

In conclusion, while Arrow Electronics experienced fluctuations in its interest coverage ratio over the period analyzed, the significant decline in 2023 and 2024 raises concerns about the company's ability to comfortably cover its interest expenses with earnings. Monitoring this ratio is crucial to assessing the company's financial stability and its capacity to service its debt obligations.

Peer comparison

Dec 31, 2024