Lumen Technologies Inc (LUMN)
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 | -9,079,000 | 341,000 | 4,223,000 | 886,000 | -2,745,000 |
| Interest expense | US$ in thousands | 1,158,000 | 1,332,000 | 1,522,000 | 1,668,000 | 2,021,000 |
| Interest coverage | -7.84 | 0.26 | 2.77 | 0.53 | -1.36 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $-9,079,000K ÷ $1,158,000K
= -7.84
The interest coverage ratio for Lumen Technologies Inc has experienced fluctuations over the past five years. In 2023, the interest coverage ratio decreased to 1.10 from 2.47 in 2022, indicating a decline in the company's ability to cover its interest expenses with its operating earnings. However, it is worth noting that the ratio was still above 1, which suggests that the company's operating income was sufficient to cover its interest payments, though with less cushion compared to previous years.
Comparing to the trend over the past five years, the interest coverage ratio was relatively higher in 2021 and 2022, at 2.82 and 2.47, respectively, indicating a stronger ability to meet interest obligations. In 2020 and 2019, the ratios were 2.16 and 1.87, respectively, showing a lower coverage compared to the more recent years.
Overall, the declining trend in the interest coverage ratio from 2022 to 2023 may raise some concerns about the company's ability to service its debt obligations from its operating earnings. It would be important for stakeholders to monitor this ratio closely in future periods to assess the company's financial health and debt servicing capacity.
Peer comparison
Dec 31, 2023