Carrier Global Corp (CARR)
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 | 2,646,000 | 2,296,000 | 4,515,000 | 2,645,000 | 3,083,000 |
| Interest expense | US$ in thousands | 580,000 | 362,000 | 302,000 | 319,000 | 298,000 |
| Interest coverage | 4.56 | 6.34 | 14.95 | 8.29 | 10.35 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $2,646,000K ÷ $580,000K
= 4.56
The interest coverage ratio measures a company's ability to meet its interest obligations on outstanding debt. A higher interest coverage ratio indicates a stronger ability to cover interest payments. Let's analyze the interest coverage ratios for Carrier Global Corp based on the provided data:
1. As of December 31, 2020, Carrier Global Corp had an interest coverage ratio of 10.35. This suggests that the company generated 10.35 times the earnings needed to cover its interest expenses, indicating a healthy ability to meet its interest obligations.
2. By December 31, 2021, the interest coverage ratio decreased to 8.29. Although still above 1 (indicating the company can cover its interest payments), the decline suggests a slight weakening in the ability to cover interest expenses compared to the previous year.
3. By December 31, 2022, the interest coverage ratio improved significantly to 14.95. This sharp increase indicates that Carrier Global Corp greatly improved its ability to cover interest expenses, reflecting a stronger financial position.
4. However, the interest coverage ratio dropped to 6.34 as of December 31, 2023. This decrease may raise concerns about the company's ability to cover interest obligations adequately, indicating a potential strain on finances.
5. The trend continued, with the interest coverage ratio falling further to 4.56 by December 31, 2024. This decline signals a continued deterioration in the company's ability to cover interest expenses, suggesting increased financial risk.
In summary, while Carrier Global Corp's interest coverage ratio fluctuated over the years, there were periods of strength and weakness. The company demonstrated strong coverage in some years, but also experienced declines that may point to challenges in meeting interest obligations. Monitoring this ratio is crucial for assessing the company's financial health and ability to manage debt effectively.
Peer comparison
Dec 31, 2024