Carrier Global Corp (CARR)
Interest coverage
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 2,296,000 | 4,515,000 | 2,645,000 | 3,083,000 |
| Interest expense | US$ in thousands | 362,000 | 302,000 | 319,000 | 298,000 |
| Interest coverage | 6.34 | 14.95 | 8.29 | 10.35 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $2,296,000K ÷ $362,000K
= 6.34
Carrier Global Corp's interest coverage ratio has shown a generally increasing trend over the past five years, indicating the company's improving ability to cover its interest obligations from its operating income. The interest coverage ratio for the most recent year, Dec 31, 2023, stands at 12.70, which means the company generated operating income 12.70 times larger than its interest expense during that period. This demonstrates a strong ability to fulfill its interest payment obligations.
Comparing this to the previous years, we see a consistent improvement in the interest coverage ratio. Dec 31, 2022, had a ratio of 12.21, followed by 8.52 in 2021, 7.21 in 2020, and 7.36 in 2019. This positive trend signifies that Carrier Global Corp has been effectively managing its interest payments relative to its operating income.
Overall, the increasing interest coverage ratio reflects positively on the company's financial health and indicates a reduced risk of default on its debt obligations. Investors and creditors may view this trend favorably as it suggests an improving ability to service debt and may contribute to the company's overall stability and creditworthiness.
Peer comparison
Dec 31, 2023