WW Grainger Inc (GWW)
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 | 2,565,000 | 2,215,000 | 1,547,000 | 1,019,000 | 1,262,000 |
| Interest expense | US$ in thousands | 93,000 | 93,000 | 1,000 | 4,000 | 9,000 |
| Interest coverage | 27.58 | 23.82 | 1,547.00 | 254.75 | 140.22 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $2,565,000K ÷ $93,000K
= 27.58
Interest coverage measures a company's ability to meet its interest payments on outstanding debt with its operating income. W.W. Grainger Inc.'s interest coverage ratio has shown a generally increasing trend over the past five years. In 2023, the interest coverage ratio improved significantly to 27.58, indicating the company's strong ability to cover its interest obligations with operating income. This substantial increase from the previous year's ratio of 23.82 highlights the company's improving financial health and better capacity to meet debt obligations comfortably. The consistent upward trajectory of the interest coverage ratio suggests that W.W. Grainger Inc. has been effectively managing its debt and generating sufficient income to cover interest expenses. Overall, the company's robust interest coverage position signifies its financial stability and ability to handle debt servicing obligations effectively.