CSX Corporation (CSX)
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 | 5,561,000 | 6,023,000 | 5,594,000 | 4,362,000 | 4,965,000 |
| Interest expense | US$ in thousands | 809,000 | 742,000 | 722,000 | 754,000 | 737,000 |
| Interest coverage | 6.87 | 8.12 | 7.75 | 5.79 | 6.74 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $5,561,000K ÷ $809,000K
= 6.87
The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt using its earnings before interest and taxes (EBIT). A higher interest coverage ratio indicates that the company is more capable of servicing its interest obligations.
Analyzing CSX Corp.'s interest coverage ratio over the past five years, we observe a generally positive trend. The interest coverage ratio has shown consistency above 5, which is considered a healthy level for most industries. CSX Corp.'s interest coverage ratio was 7.57 in 2023, indicating that the company generated operating earnings 7.57 times greater than its interest expenses for the year. This suggests CSX Corp. has a comfortable buffer to cover its interest payments.
Furthermore, the interest coverage ratio has seen fluctuations in recent years, with a peak of 8.26 in 2022 and a low of 5.92 in 2020. These fluctuations may be attributed to changes in the company's earnings and interest expense levels over the period. Overall, the improving trend in the interest coverage ratio signals that CSX Corp. has been effectively managing its debt obligations and generating sufficient earnings to cover its interest costs.
Peer comparison
Dec 31, 2023