Illinois Tool Works Inc (ITW)
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 | 4,687,000 | 4,633,000 | 4,281,000 | 4,238,000 | 4,075,000 | 4,074,000 | 3,987,000 | 3,905,000 | 3,831,000 | 3,674,000 | 3,533,000 | 3,495,000 | 3,500,000 | 3,548,000 | 3,489,000 | 3,042,000 | 2,895,000 | 2,839,000 | 2,920,000 | 3,345,000 |
| Interest expense (ttm) | US$ in thousands | 283,000 | 285,000 | 283,000 | 277,000 | 266,000 | 252,000 | 237,000 | 215,000 | 203,000 | 196,000 | 193,000 | 198,000 | 202,000 | 205,000 | 208,000 | 207,000 | 206,000 | 205,000 | 205,000 | 209,000 |
| Interest coverage | 16.56 | 16.26 | 15.13 | 15.30 | 15.32 | 16.17 | 16.82 | 18.16 | 18.87 | 18.74 | 18.31 | 17.65 | 17.33 | 17.31 | 16.77 | 14.70 | 14.05 | 13.85 | 14.24 | 16.00 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $4,687,000K ÷ $283,000K
= 16.56
Illinois Tool Works Inc has exhibited a relatively strong interest coverage ratio over the period from March 31, 2020, to December 31, 2024. The interest coverage ratio stood at 16.00 on March 31, 2020, indicating that the company's operating income was 16 times higher than its interest expenses, providing a comfortable buffer to meet its interest obligations.
Subsequently, the interest coverage ratio declined slightly to 14.24 on June 30, 2020, but remained above 10, reflecting a continued ability to cover interest expenses. The ratio fluctuated around the mid-teens range over the following quarters, with values of 13.85 on September 30, 2020, and 14.05 on December 31, 2020.
From March 31, 2021, onwards, the interest coverage ratio exhibited an improving trend, reaching its peak at 18.87 on December 31, 2022. This upward trajectory suggests that Illinois Tool Works Inc was generating significantly more operating income compared to its interest expenses during this period.
However, the interest coverage ratio experienced a modest decline in the subsequent quarters, dropping to 15.32 on December 31, 2023, and further to 15.13 on June 30, 2024. Despite these declines, the ratios remained above 10, indicating the company's ability to comfortably cover its interest payments.
Overall, the trend in Illinois Tool Works Inc's interest coverage ratio demonstrates a solid financial position with the capacity to meet its interest obligations consistently over the analyzed period.
Peer comparison
Dec 31, 2024