Illinois Tool Works Inc (ITW)
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 | 4,040,000 | 3,790,000 | 3,477,000 | 2,882,000 | 3,402,000 |
| Interest expense | US$ in thousands | 266,000 | 203,000 | 202,000 | 206,000 | 221,000 |
| Interest coverage | 15.19 | 18.67 | 17.21 | 13.99 | 15.39 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $4,040,000K ÷ $266,000K
= 15.19
The interest coverage ratio for Illinois Tool Works, Inc. has been relatively stable over the past five years. The company's interest coverage ratio ranged from 15.29 to 20.94 during this period, indicating the company's ability to meet its interest payment obligations from its operating income.
A higher interest coverage ratio is generally considered favorable as it suggests that the company is generating enough operating income to cover its interest expenses comfortably. Illinois Tool Works, Inc. has maintained a healthy interest coverage ratio above 15 throughout the period, indicating strong financial health.
The slight fluctuations in the interest coverage ratio over the years can be attributed to changes in the company's operating income and interest expenses. Overall, the consistent and relatively high interest coverage ratio demonstrates Illinois Tool Works, Inc.'s ability to manage its debt obligations effectively and indicates a lower risk of defaulting on its interest payments.
Peer comparison
Dec 31, 2023