Forward Air Corporation (FWRD)

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	212,758	265,976	159,301	44,887	117,192
Interest expense	US$ in thousands	31,571	5,138	301	4,561	2,711
Interest coverage		6.74	51.77	529.24	9.84	43.23

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $212,758K ÷ $31,571K
= 6.74

From the data provided, we can observe that Forward Air Corporation's interest coverage ratio has fluctuated over the past five years. In 2021, the company had an exceptionally high interest coverage ratio of 529.24, indicating that it generated sufficient operating income to cover its interest expenses by a significant margin. This high ratio could be attributed to either a substantial increase in operating income or a significant decrease in interest expenses.

In contrast, the interest coverage ratio plummeted to 6.74 in 2023, indicating a significant decline in the company's ability to cover its interest payments with operating income. This drop may raise concerns about Forward Air Corporation's financial health and ability to manage its debt obligations effectively.

The wide fluctuations in the interest coverage ratio over the years suggest a degree of volatility in the company's financial performance and debt management. Investors and creditors may closely monitor this ratio to assess Forward Air Corporation's ability to meet its interest payments and evaluate its overall creditworthiness.