Tennant Company (TNC)

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 138,600 87,200 81,400 58,500 71,700
Interest expense US$ in thousands 13,500 7,100 7,300 17,400 17,800
Interest coverage 10.27 12.28 11.15 3.36 4.03

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $138,600K ÷ $13,500K
= 10.27

The interest coverage ratio for Tennant Co. has shown a generally positive trend over the past five years. The ratio has improved from 4.03 in 2019 to 10.27 in 2023, indicating the company's ability to cover its interest expenses with operating income has strengthened over the period.

Tennant Co. has exhibited strong interest coverage ratios above 5 in the last three years, with ratios of 11.76 in 2022, 11.49 in 2021, and 10.27 in 2023, suggesting the company's earnings are sufficiently higher than its interest payments. This implies that Tennant Co. has a solid ability to meet its interest obligations using its operating profits.

The significant increase in the interest coverage ratio from 2019 to 2020 (from 4.03 to 3.66) may be a cause for concern, as it indicates a potential decline in the company's ability to cover its interest expenses. However, the subsequent improvement in the following years highlights Tennant Co.'s efforts to bolster its financial position and sustain its ability to service debt.

Overall, the upward trend in Tennant Co.'s interest coverage ratio reflects a positive financial performance, indicating a strong capacity to fulfill interest obligations from operating earnings and suggesting a lower risk of financial distress related to debt servicing in the foreseeable future.


Peer comparison

Dec 31, 2023