Lumen Technologies Inc (LUMN)
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 | -9,079,000 | -10,129,000 | -9,039,000 | 147,000 | 341,000 | 4,294,000 | 4,087,000 | 4,355,000 | 4,223,000 | 1,360,000 | 1,156,000 | 1,025,000 | 886,000 | 3,531,000 | 3,548,000 | 3,641,000 | -2,745,000 | -5,404,000 | -5,424,000 | -5,661,000 |
| Interest expense (ttm) | US$ in thousands | 1,158,000 | 1,148,000 | 1,216,000 | 1,259,000 | 1,332,000 | 1,424,000 | 1,438,000 | 1,485,000 | 1,522,000 | 1,546,000 | 1,578,000 | 1,608,000 | 1,668,000 | 1,756,000 | 1,843,000 | 1,947,000 | 2,021,000 | 2,076,000 | 2,137,000 | 2,165,000 |
| Interest coverage | -7.84 | -8.82 | -7.43 | 0.12 | 0.26 | 3.02 | 2.84 | 2.93 | 2.77 | 0.88 | 0.73 | 0.64 | 0.53 | 2.01 | 1.93 | 1.87 | -1.36 | -2.60 | -2.54 | -2.61 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-9,079,000K ÷ $1,158,000K
= -7.84
Lumen Technologies Inc's interest coverage has been showing a declining trend over the past few quarters. The interest coverage ratio measures the company's ability to meet its interest payments on outstanding debt using its operating income. A higher interest coverage ratio indicates that the company is more capable of servicing its debt obligations.
In Q4 2022, the interest coverage ratio was 2.47, which is a relatively healthy level, indicating that the company's operating income was 2.47 times greater than its interest expenses for that quarter. However, there has been a consistent decrease in the interest coverage ratio since then, reaching a low of 1.10 in Q4 2023. This sharp decline may raise concerns about the company's ability to comfortably meet its interest payments from operating income.
It is important for investors and stakeholders to monitor the interest coverage ratio closely, as a sustained decrease in this ratio could signal potential financial distress for the company. Management may need to proactively address the declining trend in interest coverage to ensure the company's long-term financial health.
Peer comparison
Dec 31, 2023