Huntington Ingalls Industries Inc (HII)
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 | 948,000 | 821,000 | 711,000 | 924,000 | 753,000 |
| Interest expense | US$ in thousands | 95,000 | 102,000 | 89,000 | 114,000 | 70,000 |
| Interest coverage | 9.98 | 8.05 | 7.99 | 8.11 | 10.76 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $948,000K ÷ $95,000K
= 9.98
Interest coverage measures a company's ability to meet its interest obligations on outstanding debt with its operating income. A higher interest coverage ratio indicates that the company is more capable of servicing its debt.
Based on the historical data of Huntington Ingalls Industries Inc, the interest coverage ratio has shown a fluctuating trend over the past five years. In 2019, the interest coverage ratio was the highest at 10.93, suggesting a strong ability to cover interest expenses with operating income. However, this ratio has gradually declined in the subsequent years, reaching its lowest point of 5.53 in 2022.
In 2023, the interest coverage ratio improved to 6.96, indicating a better ability to cover interest expenses compared to the previous year. While the ratio remains above 1, which is considered the minimum threshold for financial health, the downward trend in recent years may suggest increased financial risk and a potentially decreased ability to service debt obligations in the future.
It is important for investors and stakeholders to monitor Huntington Ingalls Industries Inc's interest coverage ratio closely to assess the company's financial stability and ability to manage debt effectively.
Peer comparison
Dec 31, 2023