L3Harris Technologies Inc (LHX)
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 | 2,272,000 | 1,766,000 | 1,552,000 | 2,548,000 | 1,592,000 |
| Interest expense | US$ in thousands | 675,000 | 543,000 | 279,000 | 265,000 | 254,000 |
| Interest coverage | 3.37 | 3.25 | 5.56 | 9.62 | 6.27 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $2,272,000K ÷ $675,000K
= 3.37
By analyzing the interest coverage ratios of L3Harris Technologies Inc over the years, we can observe fluctuations in the company's ability to meet its interest payment obligations.
In December 2020, the interest coverage ratio was 6.27, indicating that the company generated 6.27 times the amount of earnings before interest and taxes (EBIT) to cover its interest expense. This reflects a reasonable ability to meet interest payments.
The ratio improved in December 2021 to 9.62, suggesting a stronger ability to cover interest costs compared to the previous year. This increase indicates an enhanced capacity to service debt obligations and potentially lower financial risk.
However, there was a notable decline in the interest coverage ratio to 5.56 in December 2022, signaling a reduction in the company's ability to cover interest expenses. This could raise concerns about increasing financial leverage or a decrease in earnings relative to interest payments.
The trend worsened in December 2023, with the interest coverage ratio further decreasing to 3.25. This considerable drop raises potential red flags regarding the company's ability to service its debt obligations from its operating income.
In December 2024, although there was a slight increase to 3.37, the ratio remained at a relatively low level, indicating ongoing challenges in meeting interest payments. The persistent low interest coverage ratio over the years suggests a need for careful monitoring of the company's financial health and debt management strategies to mitigate potential risks associated with debt servicing.
Peer comparison
Dec 31, 2024