Otis Worldwide Corp (OTIS)
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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 2,008,000 | 1,999,000 | 2,207,000 | 2,217,000 | 2,186,000 | 2,155,000 | 2,113,000 | 2,020,000 | 2,033,000 | 2,038,000 | 2,051,000 | 2,125,000 | 2,108,000 | 2,052,000 | 1,964,000 | 1,819,000 | 1,605,000 |
| Interest expense (ttm) | US$ in thousands | 183,000 | 179,000 | 174,000 | 165,000 | 155,000 | 139,000 | 136,000 | 137,000 | 140,000 | 141,000 | 140,000 | 139,000 | 136,000 | 130,000 | 136,000 | 144,000 | 116,000 |
| Interest coverage | 10.97 | 11.17 | 12.68 | 13.44 | 14.10 | 15.50 | 15.54 | 14.74 | 14.52 | 14.45 | 14.65 | 15.29 | 15.50 | 15.78 | 14.44 | 12.63 | 13.84 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $2,008,000K ÷ $183,000K
= 10.97
Based on the data provided, Otis Worldwide Corp's interest coverage ratio has experienced fluctuations over the period analyzed. The interest coverage ratio indicates a company's ability to meet its interest obligations with its earnings before interest and taxes (EBIT).
From December 31, 2020, to December 31, 2024, the interest coverage ratio ranged from a high of 15.78 on September 30, 2021, to a low of 10.97 on December 31, 2024. This ratio suggests that Otis Worldwide Corp was able to comfortably cover its interest expenses with its operating profits during most quarters in the period.
However, there was a declining trend in the interest coverage ratio from mid-2022 onwards, reaching its lowest point by the end of 2024. A decreasing interest coverage ratio could raise concerns about the company's ability to service its debt obligations from its operating income.
It is essential for stakeholders to closely monitor this ratio to ensure that Otis Worldwide Corp can continue to meet its interest payments without putting undue strain on its financial health. Management may need to consider strategies to improve the interest coverage ratio, such as increasing EBIT through revenue growth or cost-cutting measures, or reducing debt levels to enhance financial stability.
Peer comparison
Dec 31, 2024