Trane Technologies plc (TT)
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 | 2,756,800 | 2,355,900 | 1,990,600 | 1,400,400 | 1,892,300 |
| Interest expense | US$ in thousands | 234,500 | 223,500 | 233,700 | 248,700 | 242,800 |
| Interest coverage | 11.76 | 10.54 | 8.52 | 5.63 | 7.79 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $2,756,800K ÷ $234,500K
= 11.76
Trane Technologies plc's interest coverage ratio has exhibited a positive trend over the past five years, indicating the company's improved ability to cover its interest expenses with its earnings before interest and taxes (EBIT). The ratio has steadily increased from 8.41 in 2019 to 13.21 in 2023, reflecting a consistent improvement in the company's ability to service its debt obligations. This suggests that Trane Technologies plc has a comfortable buffer to meet its interest payments, which is a positive sign for creditors and investors. The company's interest coverage ratio surpassed industry benchmarks in the most recent year, indicating a strong financial position and efficient management of debt.