Trane Technologies plc (TT)
Interest coverage
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 3,434,100 | 3,294,500 | 3,120,100 | 2,918,900 | 2,756,900 | 2,665,500 | 2,532,200 | 2,416,600 | 2,356,000 | 2,226,800 | 2,078,600 | 2,023,600 | 1,990,600 | 1,930,300 | 1,923,000 | 1,659,800 | 1,400,400 | 1,426,900 | 1,477,200 | 1,706,100 |
| Interest expense (ttm) | US$ in thousands | 238,500 | 236,000 | 230,900 | 235,000 | 234,500 | 233,000 | 230,900 | 225,200 | 223,600 | 223,700 | 225,600 | 229,000 | 233,700 | 239,600 | 244,300 | 246,300 | 248,700 | 250,200 | 251,700 | 254,900 |
| Interest coverage | 14.40 | 13.96 | 13.51 | 12.42 | 11.76 | 11.44 | 10.97 | 10.73 | 10.54 | 9.95 | 9.21 | 8.84 | 8.52 | 8.06 | 7.87 | 6.74 | 5.63 | 5.70 | 5.87 | 6.69 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $3,434,100K ÷ $238,500K
= 14.40
Trane Technologies plc has shown a consistent improvement in its interest coverage ratio over the reported periods from March 31, 2020, to December 31, 2024. The interest coverage ratio is a measure of a company's ability to meet its interest payments on outstanding debt.
The interest coverage ratio for Trane Technologies plc started at 6.69 on March 31, 2020, and experienced a gradual decline until September 30, 2021, reaching a low of 5.63. However, from that point onwards, there was a noticeable increase in the interest coverage ratio, indicating an improvement in the company's ability to cover its interest expenses.
By December 31, 2024, Trane Technologies plc's interest coverage ratio had increased to 14.40, reflecting a significant strengthening of the company's financial position. This upward trend suggests that the company's operating income has been sufficient to cover its interest payments, which is a positive sign for investors and creditors.
Overall, the increasing trend in Trane Technologies plc's interest coverage ratio demonstrates the company's improved financial health and ability to meet its debt obligations through its operating profits.