Fortrea Holdings Inc. (FTRE)
Interest coverage
Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | ||
---|---|---|---|---|---|
Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | -161,900 | -112,800 | -78,100 | 12,400 |
Interest expense (ttm) | US$ in thousands | 123,800 | 136,400 | 148,600 | 104,100 |
Interest coverage | -1.31 | -0.83 | -0.53 | 0.12 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-161,900K ÷ $123,800K
= -1.31
Interest coverage ratio indicates the company's ability to meet its interest payment obligations with its operating income. A higher ratio is generally preferred as it suggests a stronger ability to cover interest expenses.
In the case of Fortrea Holdings Inc., the interest coverage ratio has been consistently below 1 for the entire year 2024. This indicates that the company's operating income is insufficient to cover its interest payments. The declining trend from 0.12 in March to -1.31 in December suggests a worsening situation throughout the year.
A consistently low interest coverage ratio can be a cause for concern as it may signal financial distress and potential difficulties in meeting debt obligations. It is important for Fortrea Holdings Inc. to closely monitor its financial performance and consider strategies to improve its earnings and cash flow to enhance its ability to cover interest expenses in the future.
Peer comparison
Dec 31, 2024