United Parcel Service Inc (UPS)
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 | 8,308,000 | 9,348,000 | 13,817,000 | 12,868,000 | 7,668,000 |
| Interest expense | US$ in thousands | 866,000 | 785,000 | 704,000 | 694,000 | 701,000 |
| Interest coverage | 9.59 | 11.91 | 19.63 | 18.54 | 10.94 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $8,308,000K ÷ $866,000K
= 9.59
The interest coverage ratio measures a company's ability to meet its interest payment obligations on outstanding debt. A higher interest coverage ratio indicates a company is more capable of servicing its debt.
Analyzing United Parcel Service Inc's interest coverage ratio over the past five years, we observe the following trends:
- As of December 31, 2020, the interest coverage ratio was 10.94, reflecting a healthy level of coverage.
- In the subsequent years, the interest coverage ratio increased significantly, reaching 18.54 by December 31, 2021, and continuing to rise to 19.63 by December 31, 2022. These values suggest an improved ability to cover interest expenses comfortably.
- However, there was a slight decline in the interest coverage ratio by December 31, 2023, where it stood at 11.91, indicating a potential decrease in the ability to cover interest payments.
- By December 31, 2024, the interest coverage ratio further decreased to 9.59, falling below the levels observed in the previous years.
Overall, United Parcel Service Inc's interest coverage ratio has shown fluctuations over the years, with a general trend of improvement followed by a slight decline in recent years. It is important for investors and stakeholders to monitor the trend in the interest coverage ratio to assess the company's ability to manage its debt obligations effectively.