Regal Beloit Corporation (RRX)
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 | 426,300 | 695,000 | 364,700 | 283,800 | 353,100 |
| Interest expense | US$ in thousands | 431,000 | 87,200 | 60,400 | 39,800 | 53,000 |
| Interest coverage | 0.99 | 7.97 | 6.04 | 7.13 | 6.66 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $426,300K ÷ $431,000K
= 0.99
Regal Rexnord Corp's interest coverage ratio has fluctuated over the past five years. In 2023, the interest coverage ratio was 1.37, indicating the company earned enough operating income to cover its interest expenses 1.37 times. This ratio decreased significantly from the previous year when it was 8.43. The substantial decline in the interest coverage ratio suggests that the company's ability to cover its interest payments with its operating income weakened in 2023.
Comparing the 2023 ratio to earlier years, we see a downward trend in interest coverage since 2021 when the ratio was 7.00. However, it is worth noting that in 2023, despite the decrease, the company's interest coverage remained above 1, indicating that it still generated sufficient operating income to cover its interest expenses. This suggests that while there has been a decline in the company's ability to cover interest payments, it has not reached a critical level yet.
Further analysis of the company's financial performance and debt management practices would be necessary to understand the reasons behind the fluctuations in the interest coverage ratio and assess the potential impact on the company's financial health and stability.
Peer comparison
Dec 31, 2023