Transdigm Group Incorporated (TDG)
Interest coverage
| 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 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 3,531,000 | 3,444,000 | 3,293,000 | 3,121,000 | 2,924,000 | 2,709,000 | 2,525,000 | 2,350,000 | 2,215,000 | 2,109,000 | 1,957,000 | 1,831,000 | 1,691,000 | 1,468,000 | 1,307,000 | 1,505,000 | 1,750,000 | 2,052,000 | 2,189,000 | 2,065,000 |
| Interest expense (ttm) | US$ in thousands | 1,285,000 | 1,234,000 | 1,209,000 | 1,178,000 | 1,164,000 | 1,149,000 | 1,127,000 | 1,098,000 | 1,076,000 | 1,060,000 | 1,054,000 | 1,056,000 | 1,059,000 | 799,000 | 537,000 | 270,000 | 4,000 | 248,297 | 488,589 | 688,998 |
| Interest coverage | 2.75 | 2.79 | 2.72 | 2.65 | 2.51 | 2.36 | 2.24 | 2.14 | 2.06 | 1.99 | 1.86 | 1.73 | 1.60 | 1.84 | 2.43 | 5.57 | 437.50 | 8.26 | 4.48 | 3.00 |
September 30, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $3,531,000K ÷ $1,285,000K
= 2.75
Transdigm Group Incorporated's interest coverage ratio has shown fluctuations over the past few years. From the given data, we can see that the interest coverage ratio has generally been above 2, indicating that the company has been able to meet its interest expenses comfortably with its earnings.
However, a closer look reveals that there have been periods where the interest coverage ratio has been higher, especially in the recent quarters of September 2020 and March 2021, where the ratios were 5.57 and 437.50, respectively. These exceptionally high ratios suggest that the company's earnings were significantly higher than its interest expenses during those periods.
On the other hand, there are also quarters, such as March 2022 and June 2022, where the interest coverage ratio dropped to below 2, but it remained above 1.5. This indicates that although the company's earnings were still able to cover its interest costs, the margin of safety was tighter during those periods.
Overall, a trend of gradually increasing interest coverage ratios over the past few quarters can be observed, which may indicate an improvement in the company's ability to service its debt obligations. However, it is essential to continue monitoring the interest coverage ratio to ensure that the company can sustain its financial health in the long term.