Kratos Defense & Security Solutions (KTOS)
Interest coverage
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 44,500 | 34,800 | -14,400 | 28,100 | 30,400 |
| Interest expense | US$ in thousands | 15,200 | 21,700 | 18,300 | 23,700 | 23,600 |
| Interest coverage | 2.93 | 1.60 | -0.79 | 1.19 | 1.29 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $44,500K ÷ $15,200K
= 2.93
The interest coverage ratio for Kratos Defense & Security Solutions demonstrates notable fluctuations over the analyzed period from December 31, 2020, to December 31, 2024. As of December 31, 2020, the ratio stood at 1.29, indicating the company's EBIT was just over one times its interest obligations, suggesting a relatively modest capacity to meet interest expenses solely from operating earnings. This ratio declined further in 2021 to 1.19, reflecting a slight weakening in the company's ability to cover interest expenses with operating earnings.
By the end of 2022, the interest coverage ratio turned negative, recorded at -0.79. A negative ratio signifies that the company's EBIT was insufficient to cover interest expenses, indicative of operating difficulties or extraordinary charges impacting earnings. Such a decline points to potential financial stress during that period.
However, a recovery trend is observable in subsequent years. As of December 31, 2023, the ratio rebounded to 1.60, surpassing the 2020 level and suggesting an improvement in earnings capacity to cover interest expenses. The positive trend continued into 2024, with the ratio increasing significantly to 2.93, nearing nearly three times coverage. This substantial increase indicates a strong improvement in operating profitability or reduced interest obligations, positioning the company in a more comfortable financial position to meet its interest commitments.
Overall, the data reflects a period of financial stress in 2022, followed by a notable recovery over the subsequent years, culminating in a comfortable interest coverage ratio in 2024. The company's ability to generate sufficient earnings to cover interest expenses has notably improved, hinting at enhanced operational performance or effective debt management strategies in recent years.
Peer comparison
Dec 31, 2024