CNH Industrial N.V. (CNH)
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 | 3,062,000 | 4,012,000 | 3,342,000 | 2,444,000 | 199,000 |
| Interest expense | US$ in thousands | 1,611,000 | 1,345,000 | 734,000 | 549,000 | 660,000 |
| Interest coverage | 1.90 | 2.98 | 4.55 | 4.45 | 0.30 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $3,062,000K ÷ $1,611,000K
= 1.90
The interest coverage ratio of CNH Industrial N.V. has shown some fluctuations over the years based on the provided data.
As of December 31, 2020, the interest coverage ratio was 0.30, indicating that the company's operating income was only able to cover 30% of its interest expenses. This could be a cause for concern as it suggests a potential risk of financial distress due to a limited ability to meet interest obligations.
However, there was a significant improvement in the interest coverage ratio by December 31, 2021, reaching 4.45, which indicates a much stronger ability to cover interest expenses using operating income. This improvement is a positive sign, demonstrating the company's enhanced financial position and stability.
The trend continued to improve in the following years, with the interest coverage ratios for December 31, 2022 and December 31, 2023 standing at 4.55 and 2.98, respectively. These ratios suggest that CNH Industrial N.V. has maintained a healthy level of earnings to cover its interest obligations, although there was a slight decrease in 2023 compared to 2022.
However, by December 31, 2024, the interest coverage ratio dropped to 1.90, indicating a potential decline in the company's ability to cover interest expenses with its operating income. This could raise concerns about the company's financial health and its ability to service its debt obligations.
In conclusion, while there have been fluctuations in CNH Industrial N.V.'s interest coverage ratio over the years, the company showed improvements in its ability to cover interest expenses from operating income from 2021 to 2023. However, the decrease in 2024 highlights the importance of closely monitoring the company's financial performance and debt management practices.
Peer comparison
Dec 31, 2024