Hanesbrands Inc (HBI)
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 | 288,782 | 519,545 | 797,728 | 42,666 | 850,685 |
| Interest expense | US$ in thousands | 275,354 | 7,300 | 12,305 | 11,565 | 10,731 |
| Interest coverage | 1.05 | 71.17 | 64.83 | 3.69 | 79.27 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $288,782K ÷ $275,354K
= 1.05
The interest coverage ratio of Hanesbrands Inc has fluctuated significantly over the past five years. In 2023, the interest coverage ratio dropped to 1.05, indicating that the company's operating income only covers its interest expense slightly more than once. This could raise concerns about the company's ability to meet its interest obligations from operating income.
The sharp decrease in the interest coverage ratio in 2023 from the previous year's exceptionally high ratio of 71.17 suggests a significant deterioration in the company's ability to cover its interest expenses. The substantial decline may be attributed to a decrease in operating income or an increase in interest expenses.
In 2022 and 2021, the interest coverage ratios were relatively high at 71.17 and 64.83, respectively, indicating a strong ability to cover interest payments with operating income. This implies that the company had a comfortable margin of safety to meet its interest obligations during these years.
The interest coverage ratio of 3.69 in 2020 signifies that the company's operating income could cover its interest expense approximately 4 times. While this is a lower ratio compared to the previous years, it still indicates a reasonable ability to meet interest payments.
The high interest coverage ratio of 79.27 in 2019 suggests a robust ability to cover interest expenses with operating income, providing a strong buffer against any unforeseen challenges in meeting interest obligations.
Overall, investors and creditors may closely monitor Hanesbrands Inc's interest coverage ratio to assess the company's ability to meet its interest payments and manage its debt obligations effectively.