BorgWarner Inc (BWA)
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 | 1,160,000 | 1,374,000 | 1,151,000 | 618,000 | 1,303,000 |
| Interest expense | US$ in thousands | 90,000 | 96,000 | 117,000 | 8,000 | 16,000 |
| Interest coverage | 12.89 | 14.31 | 9.84 | 77.25 | 81.44 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,160,000K ÷ $90,000K
= 12.89
BorgWarner Inc's interest coverage ratio has shown consistent improvement over the five-year period from 2019 to 2023. The company's ability to cover its interest expenses has been strong, with a ratio well above 1 in all years, indicating the company has more than enough operating income to cover its interest payments.
The interest coverage ratio increased from 29.30 in 2019 to 33.74 in 2023, reflecting a positive trend in the company's ability to meet its interest obligations. This improvement suggests that BorgWarner Inc has been generating sufficient operating income relative to its interest expenses, signifying a lower risk of default on its debt obligations.
The consistently high interest coverage ratio indicates that BorgWarner Inc has a strong financial position and a healthy ability to service its debt. Investors and creditors may view the company favorably due to its robust interest coverage ratio, as it reflects a lower probability of financial distress and default.
Peer comparison
Dec 31, 2023