Fortune Brands Innovations Inc. (FBIN)
Interest coverage
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 737,900 | 614,900 | 933,100 | 1,023,400 | 747,700 |
| Interest expense | US$ in thousands | 120,500 | 116,500 | 119,200 | 84,300 | 83,800 |
| Interest coverage | 6.12 | 5.28 | 7.83 | 12.14 | 8.92 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $737,900K ÷ $120,500K
= 6.12
Interest coverage ratio is a key financial metric that measures a company's ability to cover its interest expenses with its operating income. Looking at Fortune Brands Innovations Inc.'s interest coverage ratio over the past five years, we observe a fluctuating trend.
In 2020, the company had an interest coverage ratio of 8.92, indicating that it earned almost 9 times the amount required to cover its interest expenses. This was a strong position, suggesting a healthy ability to meet its interest obligations.
By the end of 2021, the interest coverage ratio improved to 12.14, showing a further strengthening of the company's ability to fulfill its interest payments. This increase reflects a positive trend in the company's financial performance.
However, in 2022, there was a slight decline in the interest coverage ratio to 7.83. Although the ratio remained above 5 (considered a general benchmark for financial health), the decrease raises the concern that the company may be less able to cover its interest expenses with its operating income compared to the previous year.
The trend continued into 2023, with the interest coverage ratio decreasing further to 5.28. This significant drop indicates a potential deterioration in the company's ability to service its debt obligations from its operating earnings.
By the end of 2024, Fortune Brands Innovations Inc.'s interest coverage ratio slightly improved to 6.12, but it still remains lower than in the previous years. This suggests that the company may need to closely monitor its ability to cover interest payments with its operating income going forward.
Overall, the fluctuating trend in Fortune Brands Innovations Inc.'s interest coverage ratio reflects varying levels of financial stability and highlights the importance of monitoring the company's ability to service its debt commitments in relation to its operating earnings.
Peer comparison
Dec 31, 2024