Goodyear Tire & Rubber Co (GT)
Interest coverage
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 693,000 | 247,000 | 391,000 | 119,000 | 19,000 | 281,000 | 301,000 | 648,000 | 868,000 | 1,143,000 | 1,145,000 | 1,064,000 | 996,000 | 887,000 | 679,000 | -331,000 | -798,000 | -904,000 | -771,000 | 208,000 |
| Interest expense (ttm) | US$ in thousands | 522,000 | 520,000 | 523,000 | 531,000 | 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 |
| Interest coverage | 1.33 | 0.48 | 0.75 | 0.22 | 0.04 | 0.54 | 0.60 | 1.37 | 1.92 | 2.61 | 2.69 | 2.58 | 2.57 | 2.48 | 1.99 | -1.00 | -2.46 | -2.78 | -2.37 | 0.63 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $693,000K ÷ $522,000K
= 1.33
The interest coverage ratio for Goodyear Tire & Rubber Co has shown a fluctuating trend over the given period. Starting from a low level of 0.63 on March 31, 2020, the ratio deteriorated further to negative values in subsequent quarters, indicating the company's earnings were not sufficient to cover its interest expenses during that time.
However, there was a notable improvement in the interest coverage ratio from June 30, 2021, onwards, where it turned positive and continued to show a positive trend until December 31, 2024. This improvement suggests that Goodyear Tire & Rubber Co's operational performance strengthened, enabling it to generate earnings that were more than enough to cover its interest obligations.
Despite some fluctuations in the later quarters, the interest coverage ratio remained above 1, indicating the company had earnings to cover its interest costs. It is essential for investors and creditors to closely monitor the interest coverage ratio to assess the company's ability to meet its debt obligations.