Polaris Industries Inc (PII)
Interest coverage
| 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 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 745,500 | 862,300 | 905,200 | 750,800 | 676,800 | 517,400 | 415,800 | 583,000 | 670,300 | 896,200 | 976,600 | 463,500 | 281,500 | 82,131 | -25,969 | 405,231 | 485,431 | 487,271 | 502,153 | 489,217 |
| Interest expense (ttm) | US$ in thousands | 125,000 | 117,100 | 104,700 | 88,200 | 71,700 | 58,000 | 48,600 | 44,400 | 44,100 | 48,300 | 54,900 | 62,100 | 66,800 | 68,200 | 70,700 | 73,400 | 77,600 | 80,713 | 80,736 | 69,352 |
| Interest coverage | 5.96 | 7.36 | 8.65 | 8.51 | 9.44 | 8.92 | 8.56 | 13.13 | 15.20 | 18.55 | 17.79 | 7.46 | 4.21 | 1.20 | -0.37 | 5.52 | 6.26 | 6.04 | 6.22 | 7.05 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $745,500K ÷ $125,000K
= 5.96
Interest coverage is a key financial ratio that indicates a company's ability to meet its interest payment obligations. A higher interest coverage ratio signifies a company's stronger ability to cover interest expenses with its operating income.
Analyzing Polaris Inc's interest coverage over the past eight quarters shows a positive trend, with the ratio consistently increasing from 5.61 in Q4 2022 to 13.92 in Q1 2022. This indicates a gradual improvement in the company's ability to cover its interest expenses with operating income over time.
The increasing trend in interest coverage suggests that Polaris Inc is becoming more financially stable and less risky in terms of meeting its debt obligations. A ratio above 1 indicates that the company is generating enough operating income to cover its interest payments, and the higher ratios seen in the recent quarters indicate a stronger financial position.
Overall, Polaris Inc's interest coverage ratio trend is a positive signal for investors and creditors, as it demonstrates the company's improving ability to service its debt and manage financial risk effectively.