Forward Air Corporation (FWRD)

Interest coverage

		Mar 31, 2025	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	-914,186	-1,060,622	-1,137,667	-1,142,048	-17,687	99,213	157,628	213,800	259,134	265,976	256,538	227,349	193,928	159,301	128,047	109,081	82,166	73,325	85,453	92,633
Interest expense (ttm)	US$ in thousands	196,889	189,215	164,764	114,649	69,969	31,571	9,212	8,101	6,709	5,138	4,398	3,827	3,957	4,338	4,667	4,998	4,873	4,561	4,150	3,607
Interest coverage		-4.64	-5.61	-6.90	-9.96	-0.25	3.14	17.11	26.39	38.62	51.77	58.33	59.41	49.01	36.72	27.44	21.82	16.86	16.08	20.59	25.68

March 31, 2025 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-914,186K ÷ $196,889K
= -4.64

The interest coverage ratio measures a company's ability to cover its interest expenses with its earnings before interest and taxes (EBIT). A higher interest coverage ratio indicates a stronger ability to meet interest obligations.

Analyzing Forward Air Corporation's interest coverage ratio from June 30, 2020, to March 31, 2025, we observe a gradual decline in the ratio over time. Starting at a healthy level of 25.68 in June 2020, the interest coverage ratio steadily decreased to its lowest point of -9.96 in June 2024. This negative ratio suggests that the company's EBIT was insufficient to cover its interest expenses during that period.

It is crucial for a company to maintain a comfortable interest coverage ratio to demonstrate financial stability and solvency. A declining trend in this ratio can be a warning sign of potential financial distress or high leverage. Forward Air Corporation should closely monitor and manage its interest coverage ratio to ensure it remains at a sustainable level for the company's long-term financial health.