Chemed Corp (CHE)
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 | 353,475 | 334,263 | 352,182 | 398,345 | 266,144 |
| Interest expense | US$ in thousands | 3,108 | 4,584 | 1,868 | 2,355 | 4,535 |
| Interest coverage | 113.73 | 72.92 | 188.53 | 169.15 | 58.69 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $353,475K ÷ $3,108K
= 113.73
Chemed Corp.'s interest coverage ratio has shown a fluctuating trend over the past five years. The interest coverage ratio measures a company's ability to meet its interest obligations with its operating income. In 2023, specific data is not available for interest coverage. However, looking at the previous years, it is noted that Chemed Corp. had a strong interest coverage in 2022 with a ratio of 82.10, indicating the company's ability to cover its interest expenses 82.10 times over from its operating income.
The interest coverage improved significantly from 2020 to 2021, reaching 230.73, suggesting a substantial increase in the company's ability to cover its interest expenses. This improvement indicates a healthier financial position where the company's earnings were more than sufficient to cover its interest obligations.
In 2019, the interest coverage ratio was lower at 66.26 compared to the subsequent years, implying that Chemed Corp. had a lower capacity to cover its interest expenses with its operating income at that time. It is essential to note that a higher interest coverage ratio is generally favorable as it signifies that the company has more earnings to cover its interest costs and is at a lower risk of default on its debt.
Overall, Chemed Corp.'s interest coverage has shown a positive trend, with fluctuations, indicating improvements in the company's ability to meet its interest obligations over the past five years.
Peer comparison
Dec 31, 2023