Kontoor Brands Inc (KTB)

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	312,307	354,055	283,500	122,928	170,981
Interest expense	US$ in thousands	40,408	34,919	38,900	49,992	35,787
Interest coverage		7.73	10.14	7.29	2.46	4.78

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $312,307K ÷ $40,408K
= 7.73

The interest coverage ratio measures a company's ability to meet its interest obligations on outstanding debt. A higher ratio indicates a stronger ability to cover interest expenses with operating income.

Looking at the data provided for Kontoor Brands Inc, we observe fluctuations in the interest coverage ratio over the past five years. In 2023, the interest coverage ratio stood at 7.73, showing a slight decrease from the previous year's ratio of 10.14. Despite this decrease, Kontoor Brands Inc still has a relatively healthy interest coverage ratio, reflecting its ability to comfortably cover interest expenses with its operating income.

Comparing the current ratio to earlier years, we see that in 2021 and 2019 the interest coverage ratios were 7.29 and 4.78, respectively. The ratio appears to have improved significantly from 2020 to 2021 and then fluctuated in subsequent years. This variability suggests some potential changes in the company's financial performance and its ability to service its debt obligations with operating income.

Overall, the trend in Kontoor Brands Inc's interest coverage ratio indicates that the company has generally been able to manage its interest expenses effectively over the years, with some fluctuations seen in the ratio. It is crucial for stakeholders to continue monitoring this ratio to assess the company's financial health and ability to meet its debt obligations in the future.