Frontdoor Inc (FTDR)
Interest coverage
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 268,000 | 263,000 | 205,000 | 152,000 | 124,000 | 121,000 | 182,000 | 198,000 | 206,000 | 208,000 | 179,000 | 193,000 | 206,000 | 230,000 | 249,000 | 265,000 | 267,000 | 267,000 | 241,000 |
| Interest expense (ttm) | US$ in thousands | 40,000 | 39,000 | 37,000 | 34,000 | 31,000 | 29,000 | 28,000 | 33,000 | 39,000 | 46,000 | 53,000 | 55,000 | 57,000 | 58,000 | 60,000 | 62,000 | 63,000 | 64,000 | 55,000 |
| Interest coverage | 6.70 | 6.74 | 5.54 | 4.47 | 4.00 | 4.17 | 6.50 | 6.00 | 5.28 | 4.52 | 3.38 | 3.51 | 3.61 | 3.97 | 4.15 | 4.27 | 4.24 | 4.17 | 4.38 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $268,000K ÷ $40,000K
= 6.70
The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. Frontdoor Inc.'s interest coverage ratio has shown a fluctuating trend over the past eight quarters, ranging from a low of 5.00 in Q4 2022 to a high of 8.90 in Q3 2023.
The company's interest coverage ratio has generally been above 1, indicating that Frontdoor Inc. has had sufficient earnings to cover its interest expenses. This is a positive sign that suggests the company has a comfortable margin of safety for meeting its interest obligations.
The increasing trend in the interest coverage ratio from Q4 2022 to Q3 2023 indicates an improvement in the company's ability to service its debt. Frontdoor Inc. experienced notable increases in Q3 2023 and Q2 2023, reaching levels of 8.90 and 7.20, respectively. However, the ratio dipped in Q4 2023 to 6.68, which is still a healthy level.
Overall, Frontdoor Inc.'s interest coverage ratio demonstrates a satisfactory ability to cover its interest payments, with fluctuations reflecting changes in the company's profitability and financial performance. Investors and creditors may find this trend reassuring in assessing the company's financial health and debt servicing capabilities.
Peer comparison
Dec 31, 2023