Federal Signal Corporation (FSS)

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	278,900	274,200	261,100	239,300	224,500	210,400	187,200	172,100	160,900	141,000	135,700	130,000	129,000	136,900	136,600	130,500	134,700	136,300	140,800	154,800
Interest expense (ttm)	US$ in thousands	12,500	14,600	16,700	19,100	20,600	19,800	17,400	13,700	10,300	7,100	5,500	4,700	4,500	4,500	4,600	5,300	5,700	6,300	7,200	7,400
Interest coverage		22.31	18.78	15.63	12.53	10.90	10.63	10.76	12.56	15.62	19.86	24.67	27.66	28.67	30.42	29.70	24.62	23.63	21.63	19.56	20.92

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $278,900K ÷ $12,500K
= 22.31

The interest coverage ratio of Federal Signal Corporation has shown a generally positive trend from March 31, 2020, to December 31, 2021, increasing consistently from 20.92 to 28.67. This implies that the company's earnings before interest and taxes (EBIT) were more than sufficient to cover its interest expenses during this period. However, starting from March 31, 2022, the interest coverage ratio began to decline, reaching its lowest point of 10.63 on September 30, 2023. This might indicate a potential strain on the company's ability to cover its interest payments with its operating earnings.

Subsequently, there was a slight improvement in the interest coverage ratio from March 31, 2024, to December 31, 2024, with the ratio rising to 22.31. While this shows some improvement, the ratio is still lower compared to the earlier periods, indicating that Federal Signal Corporation may still be facing some challenges in maintaining comfortable levels of interest coverage. Continued monitoring of the interest coverage ratio is advisable to assess the company's financial health and ability to meet its debt obligations.