Johnson Controls International PLC (JCI)
Interest coverage
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 833,000 | 1,744,000 | 2,724,000 | 979,000 | 5,776,000 |
| Interest expense | US$ in thousands | 281,000 | 225,000 | 219,000 | 240,000 | 335,000 |
| Interest coverage | 2.96 | 7.75 | 12.44 | 4.08 | 17.24 |
September 30, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $833,000K ÷ $281,000K
= 2.96
The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. It is calculated by dividing the earnings before interest and taxes (EBIT) by the interest expense. A higher interest coverage ratio indicates that the company is more capable of servicing its debt.
Analyzing the interest coverage ratio of Johnson Controls International plc over the past five years, we can observe a fluctuating trend. In 2019, the interest coverage ratio was 5.99, indicating that the company's EBIT was almost six times greater than its interest expense. This implies a moderate capacity to cover interest payments.
Subsequently, there was an improvement in 2020, with the interest coverage ratio rising to 8.83, indicating a further increase in the company's ability to cover interest payments. This improvement was sustained in 2021, with the ratio reaching 14.58, signifying a significant enhancement in the company's ability to service its debt.
In 2022, Johnson Controls International plc continued to demonstrate strong interest coverage, with the ratio further increasing to 12.07. Despite a slight decrease from the previous year, the company maintained a robust position in meeting its interest obligations.
The most recent data for 2023 indicates an interest coverage ratio of 10.57, demonstrating a slight decline from the previous year but still reflecting a healthy ability to cover interest expenses.
Overall, the trend in the interest coverage ratio for Johnson Controls International plc shows an improvement in the company's ability to meet its interest obligations, with the ratio consistently above 5. This suggests that the company has been effectively managing its debt and generating sufficient earnings to cover its interest payments, indicating financial stability and strength.
Peer comparison
Sep 30, 2023