Northrop Grumman Corporation (NOC)

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	4,370,000	2,888,000	2,784,000	2,661,000	2,537,000	3,836,000	3,664,000	3,651,000	3,601,000	3,437,000	3,636,000	3,726,000	5,651,000	6,061,000	6,003,000	5,953,000	4,065,000	4,049,000	4,015,000	3,967,000
Interest expense (ttm)	US$ in thousands	621,000	589,000	569,000	562,000	545,000	537,000	518,000	502,000	506,000	519,000	529,000	534,000	556,000	583,000	605,000	623,000	593,000	563,000	532,000	515,000
Interest coverage		7.04	4.90	4.89	4.73	4.66	7.14	7.07	7.27	7.12	6.62	6.87	6.98	10.16	10.40	9.92	9.56	6.85	7.19	7.55	7.70

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $4,370,000K ÷ $621,000K
= 7.04

Northrop Grumman Corporation's interest coverage ratio, which measures the company's ability to meet interest payments on its outstanding debt, has fluctuated over the past few years.

For the period from March 31, 2020, to June 30, 2021, the interest coverage ratio remained relatively stable, ranging from 7.70 to 9.92, indicating that Northrop Grumman had sufficient earnings to cover its interest expenses comfortably. This suggests a healthy financial position and a lower risk of defaulting on its debt obligations during this period.

However, from September 30, 2021, to December 31, 2024, the interest coverage ratio gradually declined, reaching its lowest point of 4.66 by the end of December 2023. This decrease may raise concerns regarding the company's ability to meet its interest payments using its operating income. A lower interest coverage ratio may indicate increased financial risk, potentially leading to difficulties in servicing debt or obtaining new financing.

It is important for Northrop Grumman Corporation to closely monitor its interest coverage ratio and take necessary steps to improve it, such as increasing profitability, reducing debt levels, or refinancing debt at lower interest rates to ensure long-term financial stability and solvency.