Ingersoll Rand Inc (IR)

Interest coverage

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Earnings before interest and tax (EBIT) (ttm) US$ in thousands 1,300,300 1,259,800 1,211,700 1,220,700 1,175,400 1,133,900 1,027,700 950,500 857,500 825,500 774,700 840,200 628,400 526,700 446,600 109,100 89,100 -44,200 -41,800 102,200
Interest expense (ttm) US$ in thousands 213,200 188,800 164,600 154,600 156,700 153,700 140,700 123,100 103,200 88,200 84,100 83,600 87,700 92,700 99,000 107,100 111,100 107,100 101,500 93,100
Interest coverage 6.10 6.67 7.36 7.90 7.50 7.38 7.30 7.72 8.31 9.36 9.21 10.05 7.17 5.68 4.51 1.02 0.80 -0.41 -0.41 1.10

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,300,300K ÷ $213,200K
= 6.10

The interest coverage ratio is a key financial metric used to assess a company's ability to meet its interest obligations on outstanding debt. It is calculated by dividing a company's earnings before interest and taxes (EBIT) by its interest expense.

Based on the data provided for Ingersoll Rand Inc, the interest coverage ratio has fluctuated over the reporting periods. In March 2020, the interest coverage ratio was 1.10, indicating that the company's EBIT was just sufficient to cover its interest expenses. However, in subsequent quarters, the ratio dropped below 1, which suggests that the company was not generating enough earnings to cover its interest payments. This could be a cause for concern as it indicates a potential risk of insolvency or default on debt obligations.

As the period progressed, the interest coverage ratio improved significantly, reaching 7.50 by December 2023. This improvement indicates that Ingersoll Rand Inc's earnings were more than sufficient to cover its interest expenses, signaling a stronger financial position and reduced risk of default.

Overall, the trend in Ingersoll Rand Inc's interest coverage ratio shows fluctuations but demonstrates a positive trajectory towards healthier financial stability and better ability to meet its interest obligations.