Frontdoor Inc (FTDR)
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 | 268,000 | 124,000 | 206,000 | 206,000 | 266,000 |
| Interest expense | US$ in thousands | 40,000 | 31,000 | 39,000 | 57,000 | 62,000 |
| Interest coverage | 6.70 | 4.00 | 5.28 | 3.61 | 4.29 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $268,000K ÷ $40,000K
= 6.70
The interest coverage ratio for Frontdoor Inc. has shown an increasing trend over the past five years, indicating the company's improved ability to cover its interest expenses with its operating income. In 2023, the interest coverage ratio reached 6.68, the highest in the period under review, suggesting that the company generated operating earnings more than six times its interest obligations for the year.
This improvement in the interest coverage ratio reflects a positive sign of financial health and stability for Frontdoor Inc. It indicates that the company has a high capacity to meet its interest payment obligations on outstanding debt, which may be attractive to creditors and investors. Moreover, a consistently increasing interest coverage ratio over the years demonstrates the company's ability to manage its debt effectively and indicates a reduced risk of financial distress due to interest payment issues.
Overall, the trend of increasing interest coverage ratios for Frontdoor Inc. signals a strong financial position and efficient management of debt obligations, which can contribute to the company's long-term sustainability and growth prospects.
Peer comparison
Dec 31, 2023