Textron Inc (TXT)
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 | -1,827,000 | -2,028,000 | -1,821,000 | 1,014,000 | 448,000 |
| Interest expense | US$ in thousands | 97,000 | 77,000 | 107,000 | 142,000 | 166,000 |
| Interest coverage | -18.84 | -26.34 | -17.02 | 7.14 | 2.70 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $-1,827,000K ÷ $97,000K
= -18.84
The interest coverage ratio of Textron Inc has shown significant fluctuations over the years. In December 2020, the company's interest coverage ratio was 2.70, indicating that Textron was generating sufficient operating income to cover its interest expenses.
However, by December 2022, the interest coverage ratio had declined significantly to -17.02, suggesting that the company's operating income was not enough to cover its interest expenses. This negative ratio indicates financial distress and raises concerns about Textron's ability to meet its interest obligations.
The situation worsened in the subsequent years, with the interest coverage ratios for December 2023 and December 2024 further deteriorating to -26.34 and -18.84, respectively. These ratios underscore the financial challenges faced by Textron Inc in servicing its debt and meeting interest payments.
Overall, the declining trend in Textron's interest coverage ratio raises red flags about the company's financial health and highlights the importance of closely monitoring its ability to generate sufficient income to meet its interest obligations.
Peer comparison
Dec 31, 2024