Goodyear Tire & Rubber Co (GT)
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 | -147,000 | 55,000 | 200,000 | 630,000 | 843,000 | 1,476,500 | 1,546,500 | 1,379,500 | 1,247,500 | 787,000 | 571,000 | -417,000 | -820,000 | -923,000 | -789,000 | 176,000 | 503,000 | 692,000 | 1,077,000 | 1,163,000 |
| Interest expense (ttm) | US$ in thousands | 532,000 | 523,000 | 502,000 | 474,000 | 451,000 | 438,000 | 425,000 | 412,000 | 387,000 | 358,000 | 342,000 | 330,000 | 324,000 | 325,000 | 325,000 | 328,000 | 340,000 | 346,000 | 340,000 | 330,000 |
| Interest coverage | -0.28 | 0.11 | 0.40 | 1.33 | 1.87 | 3.37 | 3.64 | 3.35 | 3.22 | 2.20 | 1.67 | -1.26 | -2.53 | -2.84 | -2.43 | 0.54 | 1.48 | 2.00 | 3.17 | 3.52 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-147,000K ÷ $532,000K
= -0.28
From the data provided, we can observe fluctuations in Goodyear Tire & Rubber Co.'s interest coverage over the past eight quarters. The interest coverage ratio indicates the company's ability to meet its interest obligations with its operating income. A higher ratio suggests better ability to cover interest expenses, whereas a lower ratio may indicate potential financial risk.
In Q4 2023, the interest coverage ratio was 1.55, showing a slight increase from the previous quarter. However, compared to the same quarter in the previous year, the ratio has declined significantly from 2.53 to 1.55.
Throughout the quarters in 2023, the interest coverage ratio has been below 2, indicating that the company's operating income was only able to cover its interest expenses by a relatively small margin. The lowest interest coverage ratio was observed in Q3 2023 at 1.28, which may raise concerns about the company's ability to comfortably meet its interest obligations.
Comparing the data to the earlier quarters in 2022, we can see a general downward trend in the interest coverage ratio. In Q2 and Q3 2022, the ratios were relatively high at 3.39 and 3.48, respectively. However, the downward trend began in Q4 2022 and has persisted into 2023.
Overall, the decreasing trend in Goodyear Tire & Rubber Co.'s interest coverage ratio over the past few quarters suggests a potential strain on the company's ability to cover its interest expenses with its operating income. It would be advisable for stakeholders to monitor this ratio closely to assess the company's financial risk and ability to manage its debt obligations effectively.