GE Aerospace (GE)

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	45,321,000	43,418,000	46,149,000	-2,809,000	-9,338,000
Interest expense	US$ in thousands	1,118,000	1,477,000	1,876,000	3,273,000	4,227,000
Interest coverage		40.54	29.40	24.60	-0.86	-2.21

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $45,321,000K ÷ $1,118,000K
= 40.54

The interest coverage ratio for General Electric Co. has fluctuated over the past five years. In 2023, the interest coverage ratio improved to 3.63, indicating that General Electric's ability to cover its interest expenses with its operating profits has strengthened compared to the previous year. This increase suggests that the company's earnings are more than sufficient to cover its interest obligations.

In 2022 and 2021, the interest coverage ratios were 1.68 and 1.96, respectively, indicating that the company's ability to cover its interest expenses with operating profits was relatively low during those years. This may raise concerns about General Electric's financial health and its ability to meet debt obligations comfortably.

In 2020, the interest coverage ratio was negative at -0.76, which implies that the company's operating profits were insufficient to cover its interest expenses. A negative interest coverage ratio is a red flag for investors and creditors, indicating a potential risk of default.

In contrast, in 2019, the interest coverage ratio was 3.21, showing that General Electric had a strong ability to cover its interest expenses with its operating profits during that period.

Overall, the trend in General Electric's interest coverage ratio shows variability, with improvements in 2023 compared to the prior year, while facing challenges in 2020. Investors and analysts should continue to monitor this ratio to assess the company's financial stability and ability to meet its debt obligations in the future.