Choice Hotels International Inc (CHH)
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 | 482,776 | 400,736 | -388,969 | -192,151 | -509,403 |
| Interest expense | US$ in thousands | 87,131 | 63,780 | 43,797 | 46,680 | 49,028 |
| Interest coverage | 5.54 | 6.28 | -8.88 | -4.12 | -10.39 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $482,776K ÷ $87,131K
= 5.54
Choice Hotels International Inc's interest coverage has fluctuated significantly over the years. In 2020 and 2021, the interest coverage ratios were negative, indicating that the company's earnings were insufficient to cover its interest expenses during those years. This suggests a potential risk of financial distress if the trend continues.
However, there was an improvement in 2023 and 2024, where the interest coverage ratios turned positive at 6.28 and 5.54 respectively. This indicates that the company's earnings were more than sufficient to cover its interest expenses during those years, which is a positive sign for the company's financial health.
Overall, the recent improvement in interest coverage ratios shows a positive trend for Choice Hotels International Inc, but the company should still be cautious and continue to monitor its ability to meet its interest obligations in the future.
Peer comparison
Dec 31, 2024