Callaway Golf Company (MODG)
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 | 245,000 | 284,700 | 466,200 | -80,600 | 134,441 |
| Interest expense | US$ in thousands | 210,200 | 142,800 | 115,600 | 46,900 | 38,493 |
| Interest coverage | 1.17 | 1.99 | 4.03 | -1.72 | 3.49 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $245,000K ÷ $210,200K
= 1.17
The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. A higher interest coverage ratio indicates that the company is more capable of meeting its interest obligations.
Topgolf Callaway Brands Corp's interest coverage has fluctuated over the past five years. In 2023, the interest coverage ratio decreased to 1.13 from 1.80 in 2022, indicating a decrease in the company's ability to cover its interest expenses with its operating income. This may signal potential financial risk as the company's operating income may not be sufficient to cover its interest payments.
Comparing the data over the five-year period, we see a downward trend in the interest coverage ratio from 3.45 in 2019 to 1.13 in 2023. This indicates a declining ability to cover interest expenses over the years, which could be a cause for concern for creditors and investors.
Further analysis of the company's financial performance, cash flow from operations, and debt levels would be necessary to understand the reasons behind the decreasing trend in interest coverage and assess the company's overall financial health and sustainability.
Peer comparison
Dec 31, 2023