Dana Inc (DAN)
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 | 313,000 | 170,000 | 400,000 | 165,000 | 316,000 |
| Interest expense | US$ in thousands | 154,000 | 128,000 | 131,000 | 138,000 | 122,000 |
| Interest coverage | 2.03 | 1.33 | 3.05 | 1.20 | 2.59 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $313,000K ÷ $154,000K
= 2.03
Interest coverage measures a company's ability to cover its interest expenses with its operating income. A higher interest coverage ratio indicates a stronger ability to meet interest obligations.
In the case of Dana Inc, the interest coverage ratio fluctuated over the past five years. In 2023, the interest coverage ratio improved to 2.75 compared to 2.21 in 2022. This indicates that the company's operating income was able to cover its interest expenses more comfortably in 2023.
However, when compared to 2021, where the interest coverage ratio was 3.20, the 2023 ratio is lower. This suggests that Dana Inc may have experienced a decrease in operating income relative to its interest expenses in 2023 compared to 2021.
Furthermore, in 2019, Dana Inc had a relatively high interest coverage ratio of 5.72, indicating a strong ability to cover interest expenses with operating income. The declining trend in interest coverage from 2019 to 2023 could be a point of concern, highlighting potential challenges in generating sufficient operating income to cover interest expenses in recent years.
Overall, Dana Inc's fluctuating interest coverage ratios over the past five years suggest varying levels of ability to meet interest obligations, with a noticeable decrease in coverage from 2019 to 2023.
Peer comparison
Dec 31, 2023