Otis Worldwide Corp (OTIS)
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 | 2,008,000 | 2,186,000 | 2,033,000 | 2,108,000 | 1,639,000 |
| Interest expense | US$ in thousands | 183,000 | 155,000 | 140,000 | 136,000 | 124,000 |
| Interest coverage | 10.97 | 14.10 | 14.52 | 15.50 | 13.22 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $2,008,000K ÷ $183,000K
= 10.97
To analyze Otis Worldwide Corp's interest coverage, we will examine the trend over the years provided. The interest coverage ratio is a measure of a company's ability to meet its interest payments on outstanding debt. A higher ratio indicates that the company is more capable of covering its interest obligations.
From the data provided, we observe the following interest coverage ratios for Otis Worldwide Corp:
- December 31, 2020: 13.22
- December 31, 2021: 15.50
- December 31, 2022: 14.52
- December 31, 2023: 14.10
- December 31, 2024: 10.97
The trend in Otis Worldwide Corp's interest coverage ratios indicates a generally strong ability to cover interest payments over the years. The ratios have consistently been above 1, indicating that the company's operating income is more than sufficient to cover its interest expenses.
However, there was a slight dip in the interest coverage ratio in December 31, 2024, to 10.97, which may warrant further investigation. A ratio above 1 implies that the company is generating enough operating income to cover its interest expenses. Nonetheless, a decreasing trend in the interest coverage ratio, especially if it falls below a certain threshold, could signal potential financial distress and the need for closer monitoring of the company's debt levels and profitability.
Peer comparison
Dec 31, 2024