Leggett & Platt Incorporated (LEG)
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 | -85,000 | 489,000 | 598,400 | 410,500 | 494,100 |
| Interest expense | US$ in thousands | 88,400 | 85,500 | 76,500 | 82,700 | 90,700 |
| Interest coverage | -0.96 | 5.72 | 7.82 | 4.96 | 5.45 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $-85,000K ÷ $88,400K
= -0.96
The interest coverage ratio measures a company's ability to meet its interest obligations on outstanding debt. A higher interest coverage ratio indicates that the company is more capable of covering its interest payments with its earnings.
Looking at Leggett & Platt, Inc.'s interest coverage ratios over the past five years, we can observe fluctuations in the company's ability to cover its interest expenses. In 2023, the interest coverage ratio was 3.85, which indicates a decline from the previous year's ratio of 5.93 in 2022. This decrease may raise concerns about the company's ability to comfortably cover its interest obligations with its operating income.
Comparing the 2023 ratio to earlier years, we note a downward trend from 7.42 in 2021 and 6.21 in 2019, with a peak in 2021 and 2019. The decrease from 2021 to 2023 is noteworthy, suggesting a potential strain on the company's financial flexibility regarding debt obligations.
Overall, the declining trend in Leggett & Platt, Inc.'s interest coverage ratios in recent years may indicate a potential increase in the company's financial risk and the need to closely monitor its ability to fulfill its interest payments moving forward.
Peer comparison
Dec 31, 2023