Terex Corporation (TEX)
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 | 497,000 | 644,300 | 415,500 | 318,700 | 57,300 |
| Interest expense | US$ in thousands | 89,000 | 63,000 | 49,100 | 51,500 | 65,900 |
| Interest coverage | 5.58 | 10.23 | 8.46 | 6.19 | 0.87 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $497,000K ÷ $89,000K
= 5.58
To analyze Terex Corporation's interest coverage ratio over the past five years, we observe a fluctuating trend. In December 2020, the interest coverage ratio was recorded at 0.87, indicating the company's earnings were barely sufficient to cover its interest expenses. However, there has been a positive improvement in subsequent years. By December 2021, the ratio increased significantly to 6.19, reflecting a stronger ability to meet interest obligations.
The trend continued to improve in December 2022 and 2023, with the interest coverage ratios reaching 8.46 and 10.23, respectively. These higher ratios suggest that Terex Corporation had ample earnings to comfortably cover its interest payments during these periods.
However, in December 2024, there was a slight dip in the interest coverage ratio to 5.58. While still above the ratio in 2020, this decrease indicates that the company's earnings may have been less able to cover its interest expenses compared to the previous two years.
Overall, the trend in Terex Corporation's interest coverage ratio shows an initial struggle in 2020, followed by substantial improvement in the subsequent years, albeit with a slight setback in 2024. It is essential for investors and creditors to monitor this ratio to assess the company's ability to meet its debt obligations in the future.