Churchill Downs Incorporated (CHDN)
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 | 830,200 | 756,100 | 428,300 | -7,200 | 265,200 |
| Interest expense | US$ in thousands | 268,400 | 147,300 | 84,700 | 80,000 | 70,900 |
| Interest coverage | 3.09 | 5.13 | 5.06 | -0.09 | 3.74 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $830,200K ÷ $268,400K
= 3.09
Interest coverage measures the company's ability to meet its interest obligations using its earnings before interest and taxes (EBIT). A higher interest coverage ratio indicates that the company is more capable of servicing its debt.
Looking at the historical trend of Churchill Downs, Inc.'s interest coverage ratio, we observe fluctuations over the past five years. In 2023, the interest coverage ratio was 2.76, showing a decline from the previous year's ratio of 3.77. Despite the decrease, the company's current level of interest coverage suggests that it can cover its interest expenses 2.76 times with its operating income.
Comparing to the ratios from earlier years, we note that the interest coverage ratio was highest in 2021 at 5.32, indicating a stronger ability to cover interest payments. In contrast, the ratio was lowest in 2020 at 1.33, which may have raised concerns about the company's capability to meet its interest obligations at that time.
Overall, while the fluctuations in Churchill Downs, Inc.'s interest coverage ratio indicate varying levels of financial health over the years, the company generally shows a moderate ability to cover its interest expenses. Management should continue to monitor and manage the company's debt levels to ensure sustainable interest coverage in the future.