Colgate-Palmolive Company (CL)
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 | 3,984,000 | 2,893,000 | 3,332,000 | 3,885,000 | 3,554,000 |
| Interest expense | US$ in thousands | 287,000 | 167,000 | 192,000 | 183,000 | 192,000 |
| Interest coverage | 13.88 | 17.32 | 17.35 | 21.23 | 18.51 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $3,984,000K ÷ $287,000K
= 13.88
Colgate-Palmolive Co.'s interest coverage ratio has shown a declining trend over the past five years. The ratio has decreased from 25.50 in 2019 to 17.76 in 2023. This downward trend indicates that the company's ability to cover its interest expense with its operating income has weakened over the years.
Despite the decline, Colgate-Palmolive Co. still maintains a relatively high interest coverage ratio, with values above 15 in the last five years. This suggests that the company has been able to comfortably meet its interest obligations using its operating income.
It is worth noting that a higher interest coverage ratio is generally preferred by investors and lenders as it indicates a lower risk of default on debt payments. However, the decreasing trend in Colgate-Palmolive Co.'s interest coverage ratio may warrant further scrutiny to assess the reasons behind this decline and its potential impact on the company's financial health and stability.
Peer comparison
Dec 31, 2023