Equifax Inc (EFX)
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 | 952,900 | 1,108,700 | 1,090,500 | 820,700 | -308,100 |
| Interest expense | US$ in thousands | 241,400 | 183,000 | 145,600 | 141,600 | 111,700 |
| Interest coverage | 3.95 | 6.06 | 7.49 | 5.80 | -2.76 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $952,900K ÷ $241,400K
= 3.95
The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt with its earnings before interest and taxes (EBIT). A higher interest coverage ratio indicates a stronger ability to cover interest expenses.
Looking at Equifax, Inc.'s interest coverage ratio over the past five years, we observe the following trend:
- In 2023, the interest coverage ratio was 3.87, showing a decrease from the previous year.
- In 2022, the interest coverage ratio improved to 5.77, indicating a better ability to cover interest payments compared to the prior year.
- In 2021, the interest coverage ratio further increased to 7.82, demonstrating a strong ability to cover interest expenses.
- In 2020, the interest coverage ratio was 4.78, reflecting a slight decrease compared to 2021 but still at a reasonable level.
- In 2019, the interest coverage ratio was negative at -3.00, suggesting that EBIT was insufficient to cover interest payments, indicating a potential financial risk.
Overall, Equifax, Inc. has shown fluctuating but generally adequate interest coverage ratios over the past five years. The company was able to cover its interest obligations comfortably in most years, although the negative ratio in 2019 raises a concern regarding the company's ability to meet its interest payments with its earnings for that particular year.