Timken Company (TKR)
Interest coverage
| 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 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 627,300 | 683,100 | 667,400 | 634,100 | 615,900 | 567,700 | 558,000 | 540,200 | 523,000 | 514,400 | 522,800 | 482,100 | 456,000 | 485,300 | 471,500 | 508,100 | 531,900 | 512,100 | 503,300 | 489,800 |
| Interest expense (ttm) | US$ in thousands | 110,700 | 102,600 | 94,400 | 84,400 | 74,600 | 65,700 | 61,200 | 58,200 | 58,800 | 60,300 | 61,800 | 65,400 | 67,600 | 68,900 | 70,800 | 71,200 | 72,100 | 74,000 | 68,300 | 59,700 |
| Interest coverage | 5.67 | 6.66 | 7.07 | 7.51 | 8.26 | 8.64 | 9.12 | 9.28 | 8.89 | 8.53 | 8.46 | 7.37 | 6.75 | 7.04 | 6.66 | 7.14 | 7.38 | 6.92 | 7.37 | 8.20 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $627,300K ÷ $110,700K
= 5.67
The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt. A higher ratio is generally favorable as it indicates the company is generating sufficient earnings to cover its interest obligations.
In the case of Timken Co., the interest coverage ratio has remained consistently strong over the past eight quarters, ranging from 6.93 to 9.80. This indicates the company's ability to comfortably cover its interest expenses with its earnings.
The trend of increasing interest coverage ratios from Q1 2022 to Q4 2023 demonstrates an improving ability to meet interest obligations. The highest ratio of 9.80 in Q3 2022 indicates a peak performance during this period.
Overall, Timken Co.'s interest coverage ratios show a stable and healthy financial position, with the company consistently generating earnings that exceed its interest expenses. This suggests that Timken Co. has a strong financial foundation and is likely managing its debt obligations effectively.
Peer comparison
Dec 31, 2023