nVent Electric PLC (NVT)
Interest coverage
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 535,200 | 587,400 | 503,800 | 376,200 | 268,300 |
| Interest expense | US$ in thousands | 106,000 | 79,400 | 31,200 | 32,300 | 36,400 |
| Interest coverage | 5.05 | 7.40 | 16.15 | 11.65 | 7.37 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $535,200K ÷ $106,000K
= 5.05
The interest coverage ratio for nVent Electric PLC has shown a general trend of improvement over the years, indicating the company's ability to comfortably meet its interest payment obligations out of its operating income.
As of December 31, 2020, the interest coverage ratio was 7.37, suggesting that the company's operating income covered its interest expenses approximately 7 times. Subsequently, the ratio increased to 11.65 by December 31, 2021, and further improved to 16.15 by December 31, 2022, reflecting a strengthening financial position and enhanced ability to service its debt.
However, there was a slight decline in the interest coverage ratio to 7.40 by December 31, 2023, which may indicate a comparative decrease in the company's operating income relative to its interest obligations during that period. Additionally, the ratio decreased significantly to 5.05 by December 31, 2024, warranting further investigation into the company's ability to cover its interest expenses in the future.
Overall, while the interest coverage ratio has demonstrated positive trends in recent years, it is crucial for nVent Electric PLC to closely monitor and manage its financial performance to ensure sustainable and adequate coverage of interest payments moving forward.
Peer comparison
Dec 31, 2024