Fortive Corp (FTV)

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	1,133,700	987,400	812,800	539,400	443,900
Interest expense	US$ in thousands	123,500	98,300	103,200	148,500	142,600
Interest coverage		9.18	10.04	7.88	3.63	3.11

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $1,133,700K ÷ $123,500K
= 9.18

Interest coverage is a financial ratio that indicates a company's ability to meet its interest payment obligations on outstanding debt. A higher interest coverage ratio suggests that the company is more capable of servicing its debt obligations using its operating income.

From the data provided, Fortive Corp's interest coverage has shown fluctuations over the past five years. In 2023, the interest coverage ratio was 9.18, indicating that the company generated operating income 9.18 times greater than its interest expenses. This reflects a slight decrease from the previous year where the ratio was 10.23.

Looking back over the five-year period, the interest coverage ratio varied between 3.63 in 2020 to a peak of 10.23 in 2022. The significant increase in 2022 suggests a substantial improvement in the company's ability to cover its interest expenses. The ratio dropping to 3.63 in 2020 potentially signals a period of lower profitability or higher interest expenses relative to operating income.

Overall, Fortive Corp's interest coverage ratio has generally been healthy and above 1, indicating the company has had no difficulty meeting its interest obligations. However, it is essential for investors and analysts to consider the trend in this ratio over time to assess the company's financial health and sustainability.