Resideo Technologies Inc (REZI)
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 | 547,000 | 611,000 | 401,000 | 164,000 | 140,000 |
| Interest expense | US$ in thousands | 107,000 | 58,000 | 48,000 | 63,000 | 69,000 |
| Interest coverage | 5.11 | 10.53 | 8.35 | 2.60 | 2.03 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $547,000K ÷ $107,000K
= 5.11
The interest coverage ratio for Resideo Technologies Inc has shown a consistent improving trend over the past five years. In 2023, the interest coverage ratio was 9.06, a slight decrease from the previous year but still indicating that the company's operating income is more than sufficient to cover its interest expenses.
The significant improvement in the interest coverage ratio from 2019 to 2022 reflects a strengthening financial position, as the ratio increased from 3.74 to 11.14. This suggests that the company has become more capable of servicing its debt obligations with its operating income.
However, the slight decrease in the interest coverage ratio in 2023 compared to the previous year may warrant some attention, as it indicates a potential decrease in the company's ability to cover its interest expenses from its operating income. It would be important for Resideo Technologies Inc to closely monitor its interest coverage ratio in the upcoming periods to ensure the company remains in a healthy financial position.