Snap-On Inc (SNA)
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 | 1,354,400 | 1,227,500 | 1,120,600 | 870,100 | 954,300 |
| Interest expense | US$ in thousands | 49,900 | 47,100 | 53,100 | 54,000 | 49,000 |
| Interest coverage | 27.14 | 26.06 | 21.10 | 16.11 | 19.48 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,354,400K ÷ $49,900K
= 27.14
The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt. A higher ratio indicates a greater ability to cover interest costs.
In the case of Snap-On Inc, the interest coverage ratio has been consistently strong over the past five years, with values ranging from 16.11 to 27.14. This indicates that Snap-On Inc has had more than enough operating income to cover its interest expenses each year.
The increasing trend in the interest coverage ratio from 16.11 in 2020 to 27.14 in 2023 reflects an improvement in the company's ability to service its interest obligations. This suggests that Snap-On Inc's earnings have been sufficient to comfortably meet its interest payments and that the company may have become more efficient and profitable over the years.
Overall, the consistently high interest coverage ratio of Snap-On Inc demonstrates financial stability and sound debt management practices, which are positive signals for investors and creditors alike.
Peer comparison
Dec 31, 2023