Eaton Corporation PLC (ETN)
Interest coverage
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 4,694,000 | 4,560,000 | 4,395,000 | 4,133,000 | 3,929,000 | 3,494,000 | 3,180,000 | 2,741,000 | 2,313,000 | 2,313,000 | 2,155,000 | 2,295,000 | 2,492,000 | 2,431,000 | 2,415,000 | 1,909,000 | 1,786,000 | 1,843,000 | 2,026,000 | 2,668,000 |
| Interest expense (ttm) | US$ in thousands | 130,000 | 115,000 | 119,000 | 132,000 | 152,000 | 169,000 | 173,000 | 162,000 | 144,000 | 132,000 | 132,000 | 138,000 | 144,000 | 148,000 | 152,000 | 153,000 | 149,000 | 166,000 | 179,000 | 204,000 |
| Interest coverage | 36.11 | 39.65 | 36.93 | 31.31 | 25.85 | 20.67 | 18.38 | 16.92 | 16.06 | 17.52 | 16.33 | 16.63 | 17.31 | 16.43 | 15.89 | 12.48 | 11.99 | 11.10 | 11.32 | 13.08 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $4,694,000K ÷ $130,000K
= 36.11
The interest coverage ratio, which measures a company's ability to meet its interest obligations, indicates how many times Eaton Corporation PLC can cover its interest payments with its operating income.
Based on the provided data, Eaton Corporation PLC's interest coverage ratio has shown a general trend of improvement over the periods presented. The ratio increased from 13.08 in March 2020 to 36.11 in December 2024.
The company's interest coverage ratio remained above 1 throughout the period, which indicates that Eaton Corporation PLC generated sufficient operating income to cover its interest expenses. A ratio above 1 indicates that the company is able to meet its interest obligations comfortably.
The significant increase in the interest coverage ratio from 13.08 in March 2020 to 36.11 in December 2024 reflects a strengthening financial position and improved ability to service its debt obligations. This upward trend suggests that Eaton Corporation PLC's profitability and cash flow from operations have been sufficient to cover its interest expenses effectively over the years.
Overall, the consistent improvement in Eaton Corporation PLC's interest coverage ratio indicates a positive financial performance and a reduced risk of default on its interest payments.
Peer comparison
Dec 31, 2024