Stanley Black & Decker Inc (SWK)
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 | 739,700 | 177,600 | 370,600 | 1,768,400 | 1,665,100 |
| Interest expense | US$ in thousands | 498,600 | 559,400 | 338,500 | 175,600 | 223,100 |
| Interest coverage | 1.48 | 0.32 | 1.09 | 10.07 | 7.46 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $739,700K ÷ $498,600K
= 1.48
The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. A higher ratio indicates a better ability to meet interest obligations.
In the case of Stanley Black & Decker Inc, the interest coverage ratio has exhibited some fluctuations over the years. As of December 31, 2020, the interest coverage ratio was 7.46, indicating that the company's operating income was 7.46 times its interest expenses. This suggests a strong ability to meet interest payments.
By December 31, 2021, the interest coverage ratio improved further to 10.07, reflecting a more robust financial position and increased capacity to cover interest costs. However, there was a substantial decline in the interest coverage ratio to 1.09 by December 31, 2022, signaling a potential strain on the company's ability to service its debt obligations.
The downward trend continued in the following years, with the interest coverage ratio dropping to 0.32 by December 31, 2023 and then rising to 1.48 by December 31, 2024. These lower ratios indicate that Stanley Black & Decker Inc may be facing challenges in meeting its interest payments, which could be a cause for concern for investors and creditors.
In conclusion, while the company has shown periods of strong interest coverage, the recent decline raises potential red flags regarding its financial health and ability to manage its debt effectively. Stakeholders should closely monitor the company's future performance to assess its ability to address these issues and maintain a sustainable financial position.
Peer comparison
Dec 31, 2024