GE Aerospace (GE)

Interest coverage

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	26,994,000	45,321,000	43,418,000	46,149,000	-2,809,000
Interest expense	US$ in thousands	986,000	1,118,000	1,477,000	1,790,000	3,515,000
Interest coverage		27.38	40.54	29.40	25.78	-0.80

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $26,994,000K ÷ $986,000K
= 27.38

The interest coverage ratio reflects GE Aerospace's ability to meet its interest obligations with its operating income. Looking at the data provided, the interest coverage ratio has shown significant fluctuations over the years.

As of December 31, 2020, the interest coverage ratio was negative at -0.80, indicating that GE Aerospace's operating income was insufficient to cover its interest expenses, raising concerns about its financial health. However, from 2021 onwards, the interest coverage improved substantially. In 2021, the ratio increased to 25.78, which implies that the company's operating income was 25.78 times its interest expenses, indicating a strong ability to meet interest payments.

The trend continued to improve in the following years, with the interest coverage ratios for 2022, 2023, and 2024 reaching 29.40, 40.54, and 27.38 respectively. These figures suggest that GE Aerospace has significantly strengthened its ability to cover interest expenses, demonstrating improved financial stability and potentially reducing its risk of default.

Overall, the increasing trend in the interest coverage ratio indicates a positive development for GE Aerospace, as the company's operating income has been more than sufficient to cover its interest obligations in recent years. This improved financial performance bodes well for the company's ability to manage its debt and indicates a healthier financial position.