Honeywell International Inc (HON)
Interest coverage
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 8,271,000 | 7,084,000 | 6,793,000 | 7,578,000 | 6,371,000 |
| Interest expense | US$ in thousands | 1,058,000 | 765,000 | 414,000 | 343,000 | 359,000 |
| Interest coverage | 7.82 | 9.26 | 16.41 | 22.09 | 17.75 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $8,271,000K ÷ $1,058,000K
= 7.82
Interest coverage ratio measures a company's ability to meet its interest obligations on outstanding debt. Looking at the data for Honeywell International Inc from 2020 to 2024, we observe fluctuations in the interest coverage ratio. In 2020, the interest coverage stood at a healthy 17.75, indicating the company's earnings were almost 18 times higher than its interest expenses. This ratio improved further in 2021 to 22.09, suggesting even stronger financial health.
However, the trend reversed in 2022, with the interest coverage ratio dropping to 16.41, which could signal a slight deterioration in the company's ability to cover its interest payments. This decline continued in 2023, where the interest coverage fell to 9.26, indicating a more significant strain on the company's earnings to cover its interest expenses.
By 2024, the interest coverage ratio decreased further to 7.82, which raises concerns about the company's ability to comfortably meet its interest obligations from its earnings alone. This declining trend in the interest coverage ratio over the years indicates a potential increase in financial risk for Honeywell International Inc, emphasizing the importance of closely monitoring the company's financial performance and debt management strategies.
Peer comparison
Dec 31, 2024