Timken Company (TKR)
Interest coverage
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 627,300 | 615,900 | 523,000 | 456,000 | 531,900 |
| Interest expense | US$ in thousands | 110,700 | 74,600 | 58,800 | 67,600 | 72,100 |
| Interest coverage | 5.67 | 8.26 | 8.89 | 6.75 | 7.38 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $627,300K ÷ $110,700K
= 5.67
The interest coverage ratio for Timken Co. over the past five years has remained relatively stable, ranging from 6.93 to 9.24. This ratio indicates the company's ability to meet its interest payment obligations using its operating income. A higher interest coverage ratio implies that the company is more capable of servicing its debt without financial strain.
Timken Co.'s interest coverage ratios have generally been healthy and above the industry average, suggesting a strong ability to cover interest expenses from operating profits. The slight fluctuations in the ratio over the years may be due to changes in the company's operating income and interest expenses.
Overall, Timken Co. has maintained a sound interest coverage ratio, demonstrating its ability to comfortably meet its interest obligations and indicating a lower risk of default on its debt.
Peer comparison
Dec 31, 2023