Textron Inc (TXT)
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 | -2,028,000 | -1,821,000 | 1,014,000 | 448,000 | 1,113,000 |
| Interest expense | US$ in thousands | 77,000 | 107,000 | 142,000 | 166,000 | 171,000 |
| Interest coverage | -26.34 | -17.02 | 7.14 | 2.70 | 6.51 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $-2,028,000K ÷ $77,000K
= -26.34
Based on the data provided, Textron Inc's interest coverage ratio has fluctuated significantly over the past five years. The interest coverage ratio is a measure of a company's ability to meet its interest payments on outstanding debt. A higher interest coverage ratio indicates a stronger ability to meet interest obligations.
In 2023 and 2022, the interest coverage ratio was negative, indicating that Textron Inc's earnings before interest and taxes (EBIT) were insufficient to cover its interest expenses, which is a concerning sign for creditors and investors. This may suggest financial distress or a high level of debt relative to earnings.
However, in 2021, the interest coverage ratio improved to 7.14, indicating that Textron Inc's EBIT was more than sufficient to cover its interest payments. This could be seen as a positive development, suggesting a healthier financial position and reduced financial risk.
The ratios for 2020 and 2019 were 2.70 and 6.51, respectively, showing some volatility in Textron Inc's ability to cover its interest expenses over these years.
Overall, Textron Inc's interest coverage has shown significant fluctuations, with negative ratios in recent years raising concerns about the company's ability to manage its debt obligations. Investors and creditors should closely monitor future financial performance to assess the company's ability to generate sufficient earnings to cover interest expenses.
Peer comparison
Dec 31, 2023