Heartland Express Inc (HTLD)

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	42,385	188,358	105,407	93,419	94,275
Interest expense	US$ in thousands	25,235	9,327	0	0	1,052
Interest coverage		1.68	20.19	—	—	89.62

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $42,385K ÷ $25,235K
= 1.68

The interest coverage ratio measures a company's ability to meet its interest obligations using its operating income. Looking at the data provided for Heartland Express, Inc., we can observe a significant decline in the interest coverage ratio over the years:

- In 2023, the interest coverage ratio stands at 0.06. This indicates that the company's operating income is only able to cover 6% of its interest expenses. A ratio below 1 suggests that the company is having difficulties generating enough operating income to cover its interest payments, which may raise concerns about the firm's financial health and its ability to service its debt.

- In contrast, the interest coverage ratio was much healthier in 2022, at 12.58. During this period, the company's operating income was able to cover its interest expenses over twelve times. This high ratio signifies that the company had a strong ability to meet its interest payments from its operating earnings.

- There is missing data for the interest coverage ratio in 2021, 2020, and 2019, which complicates the trend analysis. This gap prevents us from understanding the company's interest coverage performance in those years and assessing the consistency of its ability to cover interest expenses.

In conclusion, the sharp decline in Heartland Express, Inc.'s interest coverage ratio from 2022 to 2023 raises concerns about the company's ability to meet its interest obligations. It would be essential for stakeholders to monitor the company's financial performance and take any necessary actions to improve its interest coverage ratio and overall financial health.