Fluor Corporation (FLR)
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 | 659,000 | 260,000 | 158,000 | -257,000 | 67,186 |
| Interest expense | US$ in thousands | 46,000 | 60,000 | 59,000 | 84,481 | 72,120 |
| Interest coverage | 14.33 | 4.33 | 2.68 | -3.04 | 0.93 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $659,000K ÷ $46,000K
= 14.33
The interest coverage ratio provides insights into a company's ability to meet its interest obligations on outstanding debt. A ratio below 1 indicates that the company is not generating enough operating income to cover its interest expenses, which may raise concerns about financial stability and default risk.
Analyzing Fluor Corporation's interest coverage ratio for the past five years, we observe fluctuations in its ability to cover interest payments. In December 2020, the ratio stood at 0.93, indicating insufficient earnings to cover interest expenses. The negative ratio of -3.04 in December 2021 suggests a concerning situation where the company's operating income was insufficient to cover interest costs, potentially signaling financial difficulties.
However, there was a significant improvement in the ratio in the following years, with values of 2.68 in December 2022, 4.33 in December 2023, and a notably strong ratio of 14.33 by December 2024. These improvements indicate that Fluor Corporation's operating income increased sufficiently to cover its interest expenses, reflecting a better financial position and reduced risk of default.
Overall, the varying trend in Fluor Corporation's interest coverage ratio over the years highlights the importance of monitoring the company's financial health and operational efficiency to ensure its ability to meet debt obligations and sustain long-term viability.
Peer comparison
Dec 31, 2024