Teradata Corp (TDC)
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 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 202,000 | 195,000 | 164,000 | 130,000 | 151,000 | 130,000 | 127,000 | 109,000 | 105,000 | 144,000 | 154,000 | 205,000 | 223,000 | 184,000 | 151,000 | 89,000 | 3,000 | -11,000 | 4,000 | 13,000 |
| Interest expense (ttm) | US$ in thousands | 29,000 | 30,000 | 31,000 | 31,000 | 30,000 | 29,000 | 27,000 | 25,000 | 24,000 | 23,000 | 23,000 | 25,000 | 26,000 | 26,000 | 27,000 | 27,000 | 27,000 | 28,000 | 29,000 | 30,000 |
| Interest coverage | 6.97 | 6.50 | 5.29 | 4.19 | 5.03 | 4.48 | 4.70 | 4.36 | 4.38 | 6.26 | 6.70 | 8.20 | 8.58 | 7.08 | 5.59 | 3.30 | 0.11 | -0.39 | 0.14 | 0.43 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $202,000K ÷ $29,000K
= 6.97
Teradata Corp's interest coverage ratio, as indicated by the data provided, has fluctuated over the past few years. The interest coverage ratio is used to assess a company's ability to cover its interest payments with its operating profits.
From March 2020 to September 2021, the interest coverage ratio was consistently below 1, indicating that Teradata Corp was not generating enough operating income to cover its interest expenses. This raises concerns about the company's financial health and its ability to meet interest obligations.
However, from March 2021 onwards, there has been a significant improvement in the interest coverage ratio, reaching levels above 3 and peaking at 8.58 by December 2021. This suggests that the company's operating profits have increased sufficiently to cover its interest costs multiple times over.
Although there have been fluctuations in the interest coverage ratio thereafter, with some values dropping below 5, overall, the trend shows an improvement in Teradata Corp's ability to meet its interest obligations comfortably. However, investors and creditors should continue to monitor this ratio to ensure the company's financial stability and ability to service its debt effectively.
Peer comparison
Dec 31, 2024