Illinois Tool Works Inc (ITW)

Interest coverage

		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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	4,040,000	4,038,000	3,951,000	3,867,000	3,790,000	3,638,000	3,500,000	3,467,000	3,477,000	3,526,000	3,470,000	3,026,000	2,882,000	2,823,000	2,902,000	3,324,000	3,402,000	3,438,000	3,459,000	3,520,000
Interest expense (ttm)	US$ in thousands	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	221,000	233,000	245,000	254,000
Interest coverage		15.19	16.02	16.67	17.99	18.67	18.56	18.13	17.51	17.21	17.20	16.68	14.62	13.99	13.77	14.16	15.90	15.39	14.76	14.12	13.86

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $4,040,000K ÷ $266,000K
= 15.19

Illinois Tool Works, Inc. has consistently shown strong interest coverage ratios over the past eight quarters, indicating its ability to comfortably meet its interest payment obligations. The interest coverage ratio has ranged from 17.56 to 20.94 during this period, with an average ratio of approximately 19.34.

The high and stable interest coverage ratios suggest that the company generates more than enough operating income to cover its interest expenses. This implies a lower risk of default on its debt obligations due to its robust ability to service interest payments. It also signifies that Illinois Tool Works, Inc. is operating efficiently and effectively in terms of managing its debt and interest costs.

Overall, the trend of increasing interest coverage ratios over the past quarters reflects positively on the company's financial health and ability to manage its debt obligations, thereby providing investors and stakeholders with confidence in its financial stability.