Parsons Corp (PSN)
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 | 363,621 | 248,784 | 159,506 | 105,405 | 161,989 |
| Interest expense | US$ in thousands | 51,582 | 31,497 | 23,185 | 17,697 | 20,956 |
| Interest coverage | 7.05 | 7.90 | 6.88 | 5.96 | 7.73 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $363,621K ÷ $51,582K
= 7.05
The interest coverage ratio for Parsons Corp has shown some fluctuations over the past five years. It was 7.73 in December 31, 2020, indicating that the company earned 7.73 times more operating income than the interest it needed to pay on its debt. However, by December 31, 2021, the interest coverage ratio decreased to 5.96, suggesting a slight weakening in the company's ability to cover its interest obligations.
In the following years, the interest coverage ratio improved, reaching 6.88 by December 31, 2022, and further increasing to 7.90 by December 31, 2023. This upward trend indicates that Parsons Corp managed to strengthen its ability to meet interest payments through improved operating income.
However, by December 31, 2024, the interest coverage ratio declined slightly to 7.05. While still a relatively healthy level, this decrease may signal a need for the company to monitor its debt levels and interest obligations to ensure continued financial stability and the ability to meet its debt servicing requirements.
Peer comparison
Dec 31, 2024