Ingersoll Rand Inc (IR)

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 1,300,100 1,175,400 857,500 628,400 89,200
Interest expense US$ in thousands 213,200 156,700 103,200 87,700 111,100
Interest coverage 6.10 7.50 8.31 7.17 0.80

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $1,300,100K ÷ $213,200K
= 6.10

The interest coverage ratio of Ingersoll Rand Inc has shown an improving trend over the past few years. As of December 31, 2020, the interest coverage ratio was at a concerning level of 0.80, indicating that the company's operating income was only sufficient to cover 80% of its interest expenses. However, this ratio significantly improved to 7.17 by December 31, 2021, and continued to strengthen to 8.31 by December 31, 2022. This indicates that the company's operating income became more than sufficient to cover its interest obligations.

Although there was a slight decrease in the interest coverage ratio to 7.50 by December 31, 2023, it remained at a healthy level. By December 31, 2024, the ratio decreased further to 6.10, which is still considered acceptable. Overall, the company has demonstrated an overall positive trend in its ability to meet its interest payments from operating income, signifying a stronger financial position and reduced financial risk.