Telephone and Data Systems Inc (TDS)
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 | 259,000 | -233,000 | 151,000 | 285,000 | 281,000 |
| Interest expense | US$ in thousands | 279,000 | 244,000 | 174,000 | 232,000 | 168,000 |
| Interest coverage | 0.93 | -0.95 | 0.87 | 1.23 | 1.67 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $259,000K ÷ $279,000K
= 0.93
Based on the provided data, the interest coverage ratio of Telephone and Data Systems Inc has shown a declining trend over the years. The interest coverage ratio measures the company's ability to meet its interest payments on outstanding debt. A ratio below 1 indicates that the company is not generating enough operating income to cover its interest expenses.
As of December 31, 2020, the interest coverage ratio was 1.67, indicating that the company could cover its interest expenses comfortably. However, by December 31, 2021, the ratio decreased to 1.23, suggesting a slight deterioration in the company's ability to cover its interest obligations.
The trend continued to worsen as the interest coverage ratio dropped to 0.87 by December 31, 2022, indicating a potential cause for concern as the company's ability to cover interest payments weakened further. A notable deterioration was observed by December 31, 2023, where the interest coverage ratio turned negative at -0.95, indicating that the company's operating income was insufficient to cover its interest expenses, raising serious solvency issues.
Although there was a slight improvement by December 31, 2024, with the interest coverage ratio at 0.93, it still indicates that the company may be facing challenges meeting its interest obligations.
In conclusion, the declining trend in Telephone and Data Systems Inc's interest coverage ratio raises concerns about its ability to meet its interest payments and implies potential financial instability. Further analysis of the company's financial health and performance drivers would be necessary to understand the reasons behind the deteriorating interest coverage ratio.
Peer comparison
Dec 31, 2024