Trane Technologies plc (TT)
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 | 3,433,900 | 2,756,800 | 2,355,900 | 1,990,600 | 1,400,400 |
| Interest expense | US$ in thousands | 238,400 | 234,500 | 223,500 | 233,700 | 248,700 |
| Interest coverage | 14.40 | 11.76 | 10.54 | 8.52 | 5.63 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $3,433,900K ÷ $238,400K
= 14.40
Interest coverage ratio is a key financial metric used to evaluate a company's ability to cover its interest expenses with its operating income. For Trane Technologies plc, the interest coverage ratio has shown a positive trend over the past five years.
In December 2020, the interest coverage ratio was 5.63, indicating that the company's operating income was able to cover its interest expenses approximately 5.63 times.
By December 2024, the interest coverage ratio had improved significantly to 14.40, suggesting a stronger ability to meet interest obligations with operating income. This upward trend in the interest coverage ratio reflects the company's increasing profitability and/or decreasing interest expenses, which is a positive signal for investors and creditors.
Overall, Trane Technologies plc has demonstrated a steady improvement in its interest coverage ratio, indicating a healthier financial position and a reduced risk of defaulting on its debt obligations.