Raytheon Technologies Corp (RTX)
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 | 5,156,000 | 7,173,000 | 5,972,000 | -1,578,000 | 7,549,000 |
| Interest expense | US$ in thousands | 1,505,000 | 1,276,000 | 1,322,000 | 1,366,000 | 1,591,000 |
| Interest coverage | 3.43 | 5.62 | 4.52 | -1.16 | 4.74 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $5,156,000K ÷ $1,505,000K
= 3.43
The interest coverage ratio of RTX Corp has varied over the past five years. In 2023, the interest coverage ratio stood at 2.31, indicating that the company generated operating income 2.31 times its interest expense. This represents a decrease from the previous year, where the ratio was 4.15, suggesting a reduced ability to cover interest payments from operating income.
Comparing to 2021, when the interest coverage ratio was 3.43, the decline is more evident, signifying potential increased financial risk. In 2020, the interest coverage ratio was notably low at 0.30, suggesting that RTX Corp struggled significantly to cover its interest expenses with operating income during that period.
However, the company's interest coverage improved in 2019, with a ratio of 5.24, indicating a stronger ability to cover interest payments with operating income. Overall, the fluctuation in RTX Corp's interest coverage ratio over the years reflects varying levels of financial health and risk in managing its interest obligations.
Peer comparison
Dec 31, 2023