Topbuild Corp (BLD)
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 | 900,097 | 798,851 | 462,586 | 355,546 | 291,601 |
| Interest expense | US$ in thousands | 74,614 | 56,716 | 29,143 | 32,456 | 37,823 |
| Interest coverage | 12.06 | 14.09 | 15.87 | 10.95 | 7.71 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $900,097K ÷ $74,614K
= 12.06
TopBuild Corp's interest coverage has shown a generally increasing trend over the past five years. The interest coverage ratio measures the company's ability to meet its interest obligations with its operating income. A higher interest coverage ratio indicates that the company is more capable of servicing its debt.
In 2023, the interest coverage ratio stands at 11.78, which is lower compared to the ratios of the previous two years (14.06 in 2022 and 16.35 in 2021), but still significantly higher than the ratios in 2020 (10.94) and 2019 (7.65). This indicates that TopBuild Corp's ability to cover its interest expenses with its operating income remains strong.
Overall, the increasing trend in interest coverage suggests that the company has been effectively managing its debt levels and generating sufficient operating income to comfortably meet its interest obligations. However, a slight decrease in 2023 compared to the previous years may warrant monitoring to ensure continued financial stability.