Lockheed Martin Corporation (LMT)
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 | 7,256,000 | 8,507,000 | 7,303,000 | 8,119,000 | 8,826,000 |
| Interest expense | US$ in thousands | 1,036,000 | 916,000 | 623,000 | 569,000 | 591,000 |
| Interest coverage | 7.00 | 9.29 | 11.72 | 14.27 | 14.93 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $7,256,000K ÷ $1,036,000K
= 7.00
Lockheed Martin Corporation's interest coverage has shown a gradual decline over the years based on the provided data. As of December 31, 2020, the interest coverage ratio was 14.93, indicating the company's ability to cover its interest expenses almost 15 times over. However, this ratio decreased to 14.27 by December 31, 2021, and further dropped to 11.72 by December 31, 2022. This indicates a potential increase in the company's financial risk as its ability to cover interest payments declined.
By December 31, 2023, Lockheed Martin's interest coverage ratio decreased to 9.29, signifying a significant reduction in its financial flexibility and ability to meet its interest obligations comfortably. Furthermore, as of December 31, 2024, the interest coverage ratio fell to 7.00, indicating a further deterioration in the company's ability to service its interest expenses from earnings.
Overall, the declining trend in Lockheed Martin's interest coverage ratio suggests that the company may face challenges in comfortably meeting its interest obligations in the future, potentially indicating a need for greater financial prudence and efficiency in managing its debt levels.