Colgate-Palmolive Company (CL)
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 | 4,268,000 | 3,984,000 | 2,893,000 | 3,332,000 | 3,885,000 |
| Interest expense | US$ in thousands | 292,000 | 287,000 | 167,000 | 192,000 | 183,000 |
| Interest coverage | 14.62 | 13.88 | 17.32 | 17.35 | 21.23 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $4,268,000K ÷ $292,000K
= 14.62
The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt with its operating income. Looking at the interest coverage ratios of Colgate-Palmolive Company over the past five years, we observe a gradual decline in the ratio. In 2020, the interest coverage was 21.23, indicating that the company's operating income was more than sufficient to cover its interest expenses. However, by the end of 2024, the interest coverage had decreased to 14.62.
This downward trend suggests that Colgate-Palmolive's ability to cover its interest expenses with operating income has weakened over the years. A declining interest coverage ratio can be a cause for concern as it may indicate that the company is becoming more leveraged or experiencing a decrease in profitability relative to its debt obligations. It is important for investors and creditors to monitor this trend closely to assess the company's financial health and ability to service its debt in the future.
Peer comparison
Dec 31, 2024