Hertz Global Holdings Inc (HTZ)
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 | 347,000 | 2,502,000 | 806,000 | -1,973,000 | 57,000 |
| Interest expense | US$ in thousands | 61,000 | 53,000 | 122,000 | 70,000 | 52,000 |
| Interest coverage | 5.69 | 47.21 | 6.61 | -28.19 | 1.10 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $347,000K ÷ $61,000K
= 5.69
Hertz Global Holdings Inc.'s interest coverage ratio has experienced fluctuations over the last three years. In 2023, the interest coverage ratio was notably low at 0.97, indicating that the company's operating income was barely sufficient to cover its interest expenses. This level raises concerns about the company's ability to meet its debt obligations using its current earnings.
However, the interest coverage ratio was substantially higher in 2022 at 6.33, signaling a significant improvement in the company's ability to cover its interest expenses with its operating income compared to 2023. This suggests a stronger financial position and a lower risk of default due to interest payment obligations.
In 2021, the interest coverage ratio was 4.34, showing a moderate decrease from the previous year but still indicating a reasonable ability to cover interest expenses comfortably with operating income.
The fluctuations in the interest coverage ratio should be closely monitored by investors and stakeholders as they suggest changes in the company's financial health and its capacity to fulfill its debt obligations. A low interest coverage ratio, as seen in 2023, may raise concerns about the company's financial sustainability and ability to service its debt effectively.
Peer comparison
Dec 31, 2023