Choice Hotels International Inc (CHH)

Interest coverage

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Earnings before interest and tax (EBIT) (ttm) US$ in thousands 484,129 399,330 377,541 372,841 378,427 426,169 434,910 459,471 477,097 471,139 488,228 458,395 403,188 327,019 218,782 105,441 108,225 175,846 223,268 320,242
Interest expense (ttm) US$ in thousands 87,131 83,322 77,452 69,877 63,780 58,235 51,429 46,411 43,797 43,658 45,934 46,373 46,680 46,981 48,034 49,425 49,028 49,225 48,965 46,976
Interest coverage 5.56 4.79 4.87 5.34 5.93 7.32 8.46 9.90 10.89 10.79 10.63 9.88 8.64 6.96 4.55 2.13 2.21 3.57 4.56 6.82

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $484,129K ÷ $87,131K
= 5.56

Choice Hotels International Inc's interest coverage ratio has shown a declining trend from March 2020 to September 2021, indicating potential difficulties in meeting interest obligations with earnings. The ratio improved significantly from September 2021 to December 2022, reaching its peak at 10.89. This implies the company had robust earnings to cover its interest expenses comfortably during this period. However, there was a gradual decline in the interest coverage ratio from March 2023 to December 2024, suggesting a potential increase in financial risk as earnings may have been insufficient to cover interest costs effectively. Overall, the interest coverage ratio fluctuated over the analyzed period, with both strengths and weaknesses in the company's ability to meet its interest obligations with operating income.