Cable One Inc (CABO)
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 | 106,180 | 554,840 | 537,563 | 475,201 | 389,604 |
| Interest expense | US$ in thousands | 137,997 | 170,147 | 137,713 | 113,449 | 73,607 |
| Interest coverage | 0.77 | 3.26 | 3.90 | 4.19 | 5.29 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $106,180K ÷ $137,997K
= 0.77
Interest coverage is a critical financial ratio that indicates a company's ability to meet its interest payments on outstanding debt. For Cable One Inc, the interest coverage ratio has been on a declining trend over the past five years.
As of December 31, 2020, Cable One Inc had an interest coverage ratio of 5.29, indicating that the company earned 5.29 times the amount needed to cover its interest payments. However, this ratio decreased to 4.19 by December 31, 2021, and further dropped to 3.90 by December 31, 2022.
The trend continued to deteriorate with the interest coverage ratio falling to 3.26 by December 31, 2023, and reaching a concerning level of 0.77 by December 31, 2024. A declining interest coverage ratio suggests that Cable One Inc may be facing challenges in generating sufficient earnings to cover its interest expenses, potentially leading to financial strain and a higher risk of default on its debt obligations.
It is important for Cable One Inc to closely monitor its interest coverage ratio and take necessary steps to improve its financial health, such as reducing debt levels, improving operational efficiency, or increasing revenues to strengthen its ability to service its debt obligations in the long run.
Peer comparison
Dec 31, 2024