Kontoor Brands Inc (KTB)

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 341,056 332,308 317,039 303,137 312,307 322,942 313,370 338,729 354,055 337,089 349,628 298,976 283,500 276,762 273,509 216,118 122,928 118,180 66,068 142,797
Interest expense (ttm) US$ in thousands 40,824 40,870 40,146 39,427 40,408 40,194 38,598 37,169 34,919 37,427 35,725 35,132 38,900 39,272 45,365 50,844 49,992 51,219 52,110 46,628
Interest coverage 8.35 8.13 7.90 7.69 7.73 8.03 8.12 9.11 10.14 9.01 9.79 8.51 7.29 7.05 6.03 4.25 2.46 2.31 1.27 3.06

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $341,056K ÷ $40,824K
= 8.35

The interest coverage ratio measures a company's ability to cover its interest expenses with its earnings before interest and taxes (EBIT). A higher ratio indicates that the company can more easily meet its interest payments.

Analyzing the interest coverage ratio of Kontoor Brands Inc over the past few years, we observe fluctuations in the ratio. As of December 31, 2024, the interest coverage ratio stands at 8.35, indicating the company's ability to cover its interest payments approximately 8.35 times over with its EBIT.

Furthermore, it is evident that the company's interest coverage ratio has generally been on an upward trend since March 31, 2020, where it was at 3.06. The ratio improved steadily, reaching its peak at 10.14 on December 31, 2022, before slightly declining to 8.35 by December 31, 2024.

This upward trajectory reflects positively on Kontoor Brands Inc's financial health and ability to service its debt obligations using its operating profits. However, it is essential for investors and stakeholders to continue monitoring the interest coverage ratio to ensure the company maintains a comfortable level of coverage to avoid financial distress.