Gates Industrial Corporation plc (GTES)
Interest coverage
| 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 | Dec 31, 2019 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 471,100 | 453,900 | 424,400 | 439,500 | 416,900 | 396,300 | 375,100 | 322,300 | 346,300 | 389,700 | 449,000 | 464,500 | 408,100 | 278,800 | 214,400 | 197,500 | 210,400 | 296,100 | 352,000 | 400,500 |
| Interest expense (ttm) | US$ in thousands | 147,600 | 159,900 | 163,200 | 165,300 | 159,100 | 147,600 | 139,400 | 131,600 | 131,400 | 131,700 | 133,500 | 145,800 | 151,000 | 152,000 | 154,300 | 152,600 | 151,500 | 156,400 | 157,800 | 150,600 |
| Interest coverage | 3.19 | 2.84 | 2.60 | 2.66 | 2.62 | 2.68 | 2.69 | 2.45 | 2.64 | 2.96 | 3.36 | 3.19 | 2.70 | 1.83 | 1.39 | 1.29 | 1.39 | 1.89 | 2.23 | 2.66 |
June 30, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $471,100K ÷ $147,600K
= 3.19
The interest coverage ratio for Gates Industrial Corporation plc has shown some fluctuations over the past few quarters. The ratio has ranged from a low of 1.29 in March 2020 to a high of 3.36 in December 2021.
A generally higher interest coverage ratio indicates that the company is more capable of meeting its interest obligations from its operating earnings. It demonstrates the company's ability to service its debt comfortably and suggests a lower risk of financial distress due to an inability to make interest payments.
However, the recent trend shows a slight decrease in the interest coverage ratio compared to the previous highs, with the ratio hovering around 2.6 to 3.0. While the current ratios are still above 2.0, which is often considered a threshold for financial health, it may be worth monitoring this trend closely to assess the company's ability to maintain a comfortable buffer for its interest payments.
Overall, a relatively stable and healthy interest coverage ratio indicates the company's ability to handle its interest expenses, but a declining trend would warrant further investigation to ensure the company's financial sustainability in the long term.
Peer comparison
Jun 30, 2024