Leggett & Platt Incorporated (LEG)
Interest coverage
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | -85,000 | 372,200 | 393,300 | 440,600 | 489,000 | 549,200 | 580,100 | 608,600 | 598,400 | 602,700 | 608,500 | 459,600 | 410,500 | 383,900 | 378,900 | 493,700 | 513,900 | 469,300 | 450,100 | 435,000 |
| Interest expense (ttm) | US$ in thousands | 88,400 | 90,400 | 88,900 | 86,900 | 85,500 | 81,000 | 79,500 | 77,900 | 76,500 | 77,300 | 79,200 | 81,100 | 82,700 | 85,400 | 87,100 | 90,200 | 90,700 | 85,900 | 76,400 | 67,900 |
| Interest coverage | -0.96 | 4.12 | 4.42 | 5.07 | 5.72 | 6.78 | 7.30 | 7.81 | 7.82 | 7.80 | 7.68 | 5.67 | 4.96 | 4.50 | 4.35 | 5.47 | 5.67 | 5.46 | 5.89 | 6.41 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-85,000K ÷ $88,400K
= -0.96
Leggett & Platt, Inc.'s interest coverage ratio has shown a general decreasing trend over the past year, with values ranging from 3.85 to 5.93. The interest coverage ratio measures the company's ability to meet its interest obligations with its operating income. A higher ratio indicates a stronger ability to cover interest expenses.
In Q1 2022, the interest coverage ratio was the highest at 7.49, suggesting that the company had a comfortable buffer to cover its interest expenses. However, this ratio has gradually decreased over subsequent quarters, reaching a low of 3.85 in Q4 2023. This decline may indicate that Leggett & Platt, Inc. is facing challenges in generating enough operating income to cover its interest payments.
Although the interest coverage ratios are above 1 in all quarters, indicating that the company is able to meet its interest obligations, the downward trend should be carefully monitored. Investors and creditors typically prefer higher interest coverage ratios as they indicate a lower risk of default. Leggett & Platt, Inc. may need to focus on improving its operating efficiency and profitability to maintain a healthy interest coverage ratio in the future.
Peer comparison
Dec 31, 2023