Tetra Tech Inc (TTEK)
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 | 377,144 | 358,113 | 345,538 | 331,768 | 345,277 | 340,447 | 327,481 | 313,383 | 299,670 | 278,702 | 263,601 | 257,319 | 244,042 | 241,092 | 195,022 | 196,338 | 196,353 | 188,762 | 211,382 | 202,037 |
| Interest expense (ttm) | US$ in thousands | 50,743 | 46,538 | 36,182 | 24,232 | 14,053 | 11,585 | 12,466 | 12,284 | 11,963 | 12,085 | 11,567 | 12,394 | 13,072 | 13,395 | 14,433 | 14,415 | 14,078 | 13,626 | 13,534 | 14,333 |
| Interest coverage | 7.43 | 7.70 | 9.55 | 13.69 | 24.57 | 29.39 | 26.27 | 25.51 | 25.05 | 23.06 | 22.79 | 20.76 | 18.67 | 18.00 | 13.51 | 13.62 | 13.95 | 13.85 | 15.62 | 14.10 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $377,144K ÷ $50,743K
= 7.43
Interest coverage is a key financial ratio that measures a company's ability to meet its interest obligations with its operating income. A higher interest coverage ratio indicates a company is more capable of meeting its interest payments.
Analyzing Tetra Tech, Inc.'s interest coverage from Q1 2023 to Q1 2024 shows a generally high and stable trend. The interest coverage ranged from 8.56 to 29.42 during this period. The peak interest coverage of 29.42 in Q4 2022 indicates a strong ability to cover interest expenses with operating income.
The interest coverage ratio gradually declined in subsequent quarters but remained well above 1, indicating that Tetra Tech has sufficient operating income to cover its interest expenses comfortably. The lowest interest coverage of 8.56 in Q1 2024 suggests a slight decrease in this ability compared to previous periods, but it is still at a healthy level.
Overall, Tetra Tech, Inc.'s interest coverage ratio demonstrates a solid financial position and indicates the company's ability to manage its debt obligations effectively. However, monitoring future trends in interest coverage will be important to ensure the company's continued ability to meet its interest payments.
Peer comparison
Dec 31, 2023