General Dynamics Corporation (GD)
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 | 4,383,000 | 4,427,000 | 4,304,000 | 4,227,000 | 4,674,000 |
| Interest expense | US$ in thousands | 399,000 | 391,000 | 431,000 | 489,000 | 472,000 |
| Interest coverage | 10.98 | 11.32 | 9.99 | 8.64 | 9.90 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $4,383,000K ÷ $399,000K
= 10.98
General Dynamics Corp.'s interest coverage ratio has shown a generally increasing trend from 2019 to 2023. The interest coverage ratio measures the company's ability to meet its interest payments on outstanding debt with its operating income. A higher ratio indicates that the company is more capable of servicing its debt obligations.
In 2023, General Dynamics Corp. achieved an interest coverage ratio of 12.38, which means the company's operating income was sufficient to cover its interest expenses approximately 12 times. This indicates a strong ability to meet interest payments from its earnings.
The consistent improvement in the interest coverage ratio over the years reflects the company's effective management of its debt and operational efficiency. It suggests that General Dynamics Corp. has been generating enough operating income to comfortably cover its interest expenses, which is a positive sign for creditors and investors.
Overall, the increasing trend in the interest coverage ratio demonstrates the company's sound financial health and ability to handle its debt obligations effectively over the five-year period.
Peer comparison
Dec 31, 2023