Texas Instruments Incorporated (TXN)
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 | 7,331,000 | 10,140,000 | 8,960,000 | 5,894,000 | 5,723,000 |
| Interest expense | US$ in thousands | 11,000 | 6,000 | 184,000 | 190,000 | 170,000 |
| Interest coverage | 666.45 | 1,690.00 | 48.70 | 31.02 | 33.66 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $7,331,000K ÷ $11,000K
= 666.45
The interest coverage ratio measures a company's ability to pay interest expenses on outstanding debt. A higher ratio indicates a stronger ability to cover interest payments.
Texas Instruments Inc.'s interest coverage ratio has fluctuated over the past five years, ranging from 20.77 in 2023 to 49.76 in 2021. This indicates that in each of these years, the company generated significantly more operating income than required to cover its interest expenses, demonstrating a healthy financial position.
The relatively high ratios suggest that Texas Instruments Inc. has been effectively managing its debt obligations and has sufficient operating income to service its interest payments. The significant fluctuation in the interest coverage ratio over the years may be attributed to changes in the company's operating performance and debt profile.
Overall, the trend of consistently high interest coverage ratios reflects the company's ability to comfortably meet its interest obligations, enhancing its financial stability and creditworthiness.
Peer comparison
Dec 31, 2023