L3Harris Technologies Inc (LHX)
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 | 2,485,000 | 2,593,000 | 2,556,000 | 2,459,000 | 2,309,000 | 2,160,000 | 1,350,000 | 1,423,000 | 1,552,000 | 1,600,000 | 2,475,000 | 2,492,000 | 2,558,000 | 2,708,000 | 2,674,000 | 2,585,000 | 2,577,000 | 3,086,000 | 2,774,000 | 2,590,000 |
| Interest expense (ttm) | US$ in thousands | 675,000 | 685,000 | 678,000 | 617,000 | 543,000 | 446,000 | 357,000 | 313,000 | 279,000 | 272,000 | 269,000 | 267,000 | 265,000 | 266,000 | 261,000 | 261,000 | 263,000 | 263,000 | 268,000 | 242,000 |
| Interest coverage | 3.68 | 3.79 | 3.77 | 3.99 | 4.25 | 4.84 | 3.78 | 4.55 | 5.56 | 5.88 | 9.20 | 9.33 | 9.65 | 10.18 | 10.25 | 9.90 | 9.80 | 11.73 | 10.35 | 10.70 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $2,485,000K ÷ $675,000K
= 3.68
The interest coverage ratio measures a company's ability to meet its interest payments on debt obligations. It is calculated by dividing the earnings before interest and taxes (EBIT) by the interest expenses. Higher interest coverage ratios indicate a company's greater ability to meet interest payments.
Analyzing L3Harris Technologies Inc's interest coverage over the reported periods, we observe a gradual decline in the ratio from a robust level of 10.70 in March 2020 to 3.68 in December 2024. This downtrend may suggest a weakening ability to cover interest expenses over time.
The company maintained relatively stable interest coverage ratios above 9 in the initial periods up to March 2022, which indicated a strong ability to service its interest obligations. However, a noticeable decline in the ratio from September 2022 onwards is a point of concern as it dropped below 6 by September 2022 and continued to decrease further.
The declining trend in L3Harris Technologies Inc's interest coverage ratio may raise concerns about the company's financial health, particularly its ability to meet interest payments comfortably in the long run. Investors and creditors may closely monitor this ratio to assess the company's financial risk and debt servicing capabilities. Further analysis of the company's financial performance and debt management strategies may be necessary to understand the reasons behind the decreasing trend in interest coverage.
Peer comparison
Dec 31, 2024