Texas Instruments Incorporated (TXN)
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 | 5,961,000 | 7,331,000 | 10,246,000 | 9,103,000 | 6,207,000 |
| Interest expense | US$ in thousands | 508,000 | 353,000 | 214,000 | 184,000 | 190,000 |
| Interest coverage | 11.73 | 20.77 | 47.88 | 49.47 | 32.67 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $5,961,000K ÷ $508,000K
= 11.73
Interest coverage ratio is a financial metric used to evaluate a company's ability to pay interest expenses on its debt. It is calculated by dividing a company's earnings before interest and taxes (EBIT) by its interest expenses.
Texas Instruments Incorporated's interest coverage ratio has shown a generally positive trend over the years, indicating the company's strong ability to cover its interest obligations from its operating earnings.
- As of December 31, 2020, the interest coverage ratio was 32.67, which suggests that the company earned 32.67 times its interest expenses during that period.
- By the end of December 31, 2021, the interest coverage ratio had improved to 49.47, indicating a more robust financial position.
- The ratio slightly decreased to 47.88 by December 31, 2022, but it still remains at a healthy level.
- However, there was a notable decline in the interest coverage ratio to 20.77 by December 31, 2023, which may warrant closer monitoring to ensure the company can comfortably meet its interest obligations.
- The ratio dropped further to 11.73 as of December 31, 2024, which indicates a significant decrease in the company's ability to cover its interest expenses with its operating earnings.
In conclusion, while Texas Instruments Incorporated has generally maintained a strong interest coverage ratio over the years, the decreasing trend in recent periods may raise concerns about its ability to service its debt in the future. Further analysis of the company's financial performance and debt structure may be necessary to fully assess its financial stability.
Peer comparison
Dec 31, 2024