RXO Inc. (RXO)
Interest coverage
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | -29,236 | 7,764 | 19,000 | 29,000 | 47,000 | 34,000 | 67,000 | 127,000 | 176,000 | 233,000 | 229,000 | 197,000 | 196,000 |
| Interest expense (ttm) | US$ in thousands | 30,000 | 30,000 | 24,008 | 24,008 | 24,008 | 21,008 | 33,000 | 26,000 | 21,000 | 18,000 | 8,000 | 8,000 | 5,000 |
| Interest coverage | -0.97 | 0.26 | 0.79 | 1.21 | 1.96 | 1.62 | 2.03 | 4.88 | 8.38 | 12.94 | 28.62 | 24.62 | 39.20 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-29,236K ÷ $30,000K
= -0.97
The interest coverage ratio measures a company's ability to meet its interest obligations on outstanding debt. A higher ratio indicates that the company is more capable of servicing its debt with its earnings.
In the case of RXO Inc., the interest coverage ratio has been steadily decreasing over the period from December 31, 2021, to December 31, 2024. Starting at 39.20 in December 2021, the ratio declined to -0.97 by December 31, 2024, reflecting a significant deterioration in the company's ability to cover its interest expenses with its operating income.
The decline in the interest coverage ratio may indicate that RXO Inc. is facing challenges in generating sufficient earnings to meet its interest obligations. A ratio below 1, as seen in the latter part of the period, suggests that the company's operating income is insufficient to cover its interest expenses, raising concerns about its financial health and ability to manage its debt.
It is important for investors and stakeholders to closely monitor the trend of the interest coverage ratio for RXO Inc. as a declining ratio could signal financial distress and potential difficulties in meeting debt obligations in the future.
Peer comparison
Dec 31, 2024