Resideo Technologies Inc (REZI)
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 | 302,000 | 420,000 | 685,000 | 569,000 | 164,000 |
| Interest expense | US$ in thousands | 81,000 | 65,000 | 58,000 | 48,000 | 63,000 |
| Interest coverage | 3.73 | 6.46 | 11.81 | 11.85 | 2.60 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $302,000K ÷ $81,000K
= 3.73
Resideo Technologies Inc's interest coverage ratio has shown variability over the past five years. In December 2020, the interest coverage was at 2.60, indicating the company's ability to cover its interest expenses was relatively low. However, there was a significant improvement in this ratio in the subsequent years, with the value increasing to 11.85 by December 2021 and maintaining at a similar level in December 2022 at 11.81. This shows a substantial improvement in the company's ability to cover its interest payments from its operating earnings.
By December 2023, the interest coverage ratio decreased to 6.46, suggesting a slight reduction in the company's ability to cover interest expenses compared to the previous years. In December 2024, there was a further decrease to 3.73, indicating a significant decline in the coverage of interest payments from operating income.
Overall, the trend in Resideo Technologies Inc's interest coverage ratio demonstrates both improvements and declines over the five-year period. A higher interest coverage ratio is generally favorable as it signifies the company's capacity to meet its interest obligations comfortably. However, the decline in the ratio in the last two years highlights a potential strain on the company's ability to cover its interest expenses with operating earnings. This trend warrants further investigation to understand the underlying reasons for the fluctuations and assess the company's overall financial health.