Norfolk Southern Corporation (NSC)
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 | 3,042,000 | 4,822,000 | 4,524,000 | 3,155,000 | 4,095,000 |
| Interest expense | US$ in thousands | 722,000 | 692,000 | 646,000 | 625,000 | 604,000 |
| Interest coverage | 4.21 | 6.97 | 7.00 | 5.05 | 6.78 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $3,042,000K ÷ $722,000K
= 4.21
Norfolk Southern Corp.'s interest coverage ratio has displayed some variability over the past five years. The ratio indicates the company's ability to meet its interest obligations from its operating income.
In 2023, the interest coverage ratio decreased to 5.49 from the previous year's 6.95, signaling a slight decline in Norfolk Southern's ability to cover its interest expenses. However, the ratio remains above 1, which generally suggests that the company is generating sufficient earnings to cover its interest payments.
Comparing the current ratio to the figures in 2021 and 2020, Norfolk Southern's interest coverage ratio appears to have fluctuated within a relatively narrow range, remaining comfortably above 5 in all those years. This consistency suggests that the company has been effectively managing its interest obligations relative to its operating income.
When contrasting the 2023 ratio with the highest figure of 6.95 in 2022 and the lowest figure of 5.42 in 2020, it is evident that Norfolk Southern's interest coverage has shown some volatility. This could be a result of various factors impacting the company's operating performance and interest costs during these periods.
Overall, despite the slight decrease in 2023, Norfolk Southern Corp. has maintained a generally healthy interest coverage ratio in the past five years, indicating a reasonable capacity to meet its interest payments. Monitoring this ratio in conjunction with other financial metrics can provide a more comprehensive assessment of the company's financial health and performance.
Peer comparison
Dec 31, 2023