CNH Industrial N.V. (CNH)
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 | 4,310,000 | 3,505,000 | 2,614,000 | 252,000 | 1,949,000 |
| Interest expense | US$ in thousands | 1,345,000 | 734,000 | 549,000 | 660,000 | 798,000 |
| Interest coverage | 3.20 | 4.78 | 4.76 | 0.38 | 2.44 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $4,310,000K ÷ $1,345,000K
= 3.20
Interest coverage ratio is a financial metric used to evaluate a company's ability to pay interest on its outstanding debt. It is calculated by dividing a company's earnings before interest and taxes (EBIT) by its interest expenses. A higher interest coverage ratio indicates that the company is more capable of meeting its interest obligations.
Looking at the trend of CNH Industrial N.V.'s interest coverage ratio over the past five years, there are fluctuations in the ratio. In 2023, the interest coverage ratio decreased to 3.20 from 4.78 in 2022, signaling a decline in the company's ability to cover its interest expenses with its earnings.
However, it's important to note that the interest coverage ratio in 2023 is still higher than the ratio in 2020, which was considerably lower at 0.38. This significant improvement over the past three years indicates an enhancement in CNH Industrial N.V.'s ability to handle its interest payments.
Overall, while there has been some volatility in the interest coverage ratio of CNH Industrial N.V., the company has shown an overall positive trend in improving its ability to cover its interest expenses with its operating earnings in recent years. It would be essential for the company to continue monitoring and managing its interest obligations effectively to sustain and enhance its financial health.
Peer comparison
Dec 31, 2023