Textron Inc (TXT)
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 | -2,028,000 | -1,820,000 | -1,279,000 | -795,000 | -206,000 | 1,134,000 | 1,090,000 | 1,049,000 | 1,014,000 | 990,000 | 898,000 | 569,000 | 448,000 | 444,000 | 570,000 | 968,000 | 1,113,000 | 1,181,000 | 1,565,000 | 1,545,000 |
| Interest expense (ttm) | US$ in thousands | 40,000 | 32,000 | 44,000 | 57,000 | 107,000 | 129,000 | 131,000 | 135,000 | 142,000 | 150,000 | 160,000 | 166,000 | 166,000 | 167,000 | 168,000 | 169,000 | 171,000 | 171,000 | 168,000 | 167,000 |
| Interest coverage | -50.70 | -56.88 | -29.07 | -13.95 | -1.93 | 8.79 | 8.32 | 7.77 | 7.14 | 6.60 | 5.61 | 3.43 | 2.70 | 2.66 | 3.39 | 5.73 | 6.51 | 6.91 | 9.32 | 9.25 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-2,028,000K ÷ $40,000K
= -50.70
The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt. A higher ratio indicates a stronger ability to cover interest payments with operating income.
Looking at the trend of Textron Inc's interest coverage ratio over the past few quarters, we observe a range of values. In the most recent period, the interest coverage ratio was significantly negative at -50.70, indicating that the company's operating income was insufficient to cover its interest expenses.
The ratio has been fluctuating over the quarters, with some periods showing relatively strong interest coverage above 5, such as in the second half of 2021 and early 2022. However, there are also periods where the ratio dipped below 1, indicating a potential struggle to meet interest payment obligations.
The declining trend in interest coverage from the end of 2021 to the end of 2023 raises concerns about Textron Inc's ability to meet its debt obligations using its operating income. Investors and creditors may view the company as being at higher risk of default if this trend continues.
Overall, Textron Inc's interest coverage ratio analysis suggests that the company may face challenges in servicing its interest payments with its current level of operating income, and management may need to closely monitor and address this aspect of the company's financial health.
Peer comparison
Dec 31, 2023