nVent Electric PLC (NVT)
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 | 578,900 | 503,800 | 353,000 | 26,900 | 302,100 |
| Interest expense | US$ in thousands | 79,400 | 31,200 | 32,300 | 36,400 | 44,700 |
| Interest coverage | 7.29 | 16.15 | 10.93 | 0.74 | 6.76 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $578,900K ÷ $79,400K
= 7.29
nVent Electric plc's interest coverage has shown variability over the last five years. The interest coverage ratio indicates the company's ability to meet its interest obligations with its operating income. A higher ratio is generally favorable as it suggests the company is more capable of servicing its debt.
In 2023, the interest coverage ratio decreased to 7.40 from 14.12 in 2022, indicating a decline in the company's ability to cover its interest expenses with operating income. However, despite the decrease, the ratio remains above 1, suggesting that nVent Electric plc is still generating sufficient operating income to cover its interest payments.
Comparing to the previous years, nVent Electric plc's interest coverage ratio was relatively high in 2022 and 2021 at 14.12 and 11.00, respectively, before decreasing in 2023. The ratio was also above 7 in 2020 and 2019, indicating consistent performance in terms of meeting interest obligations with operating income.
Overall, while the recent decrease in the interest coverage ratio may warrant monitoring, nVent Electric plc has historically maintained a healthy level of interest coverage, indicating a reasonable ability to manage its interest expenses.
Peer comparison
Dec 31, 2023