Forward Air Corporation (FWRD)

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	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	212,758	157,628	213,800	259,134	265,976	256,538	220,382	186,961	146,801	95,971	83,627	49,346	44,887	76,029	83,192	105,504	117,505	118,935	118,485	121,199
Interest expense (ttm)	US$ in thousands	31,571	9,212	8,101	6,709	5,138	361	-210	-80	301	4,667	4,998	4,873	4,561	4,149	3,606	2,989	2,711	2,373	2,084	1,986
Interest coverage		6.74	17.11	26.39	38.62	51.77	710.63	—	—	487.71	20.56	16.73	10.13	9.84	18.32	23.07	35.30	43.34	50.12	56.85	61.03

December 31, 2023 calculation

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

The interest coverage ratio measures a company's ability to meet its interest obligations on outstanding debt. A higher interest coverage ratio indicates that the company is more capable of meeting its interest payments.

Based on the data provided for Forward Air Corporation, the interest coverage ratio has fluctuated over time. In the most recent quarter, as of December 31, 2023, the interest coverage ratio was 6.74, indicating that the company generated 6.74 times the earnings necessary to cover its interest expenses. This represents a decrease from the preceding quarter's ratio of 17.11 on September 30, 2023.

The interest coverage ratio showed significant variation in recent quarters, with notable peaks such as 710.63 on September 30, 2022, and 487.71 on December 31, 2021. These extremely high ratios suggest a strong ability to cover interest payments during those periods.

It is essential to understand the reasons behind such drastic fluctuations in the interest coverage ratio for a comprehensive analysis of the company's financial health. It may be attributed to various factors such as changes in operating income, interest expenses, non-recurring items, or the refinancing of debt.

Overall, a consistent and healthy interest coverage ratio is crucial for a company's financial stability, indicating a sound ability to meet its debt obligations. Further analysis and comparison to industry benchmarks would provide additional insights into Forward Air Corporation's financial performance and risk management.