United Parcel Service Inc (UPS)
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 | 9,358,000 | 15,529,000 | 17,289,000 | 2,545,000 | 6,305,000 |
| Interest expense | US$ in thousands | 785,000 | 704,000 | 694,000 | 701,000 | 653,000 |
| Interest coverage | 11.92 | 22.06 | 24.91 | 3.63 | 9.66 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $9,358,000K ÷ $785,000K
= 11.92
The interest coverage ratio for United Parcel Service, Inc. has shown some fluctuations over the past five years. In 2023, the interest coverage ratio was 11.64, which indicates that the company's operating income was sufficient to cover its interest expenses approximately 11.64 times.
Compared to the prior year, the interest coverage ratio decreased from 18.60 in 2022 to 11.64 in 2023. Despite this decline, the ratio still remains above 1, suggesting that United Parcel Service, Inc. has a strong ability to meet its interest obligations using its operating income.
When looking at the trend over the past five years, the company generally maintained a healthy interest coverage ratio above 10, indicating a consistent ability to cover its interest expenses with its earnings. However, the fluctuation in the ratio should be monitored closely, as a declining trend could signal a potential strain on the company's ability to meet its interest payments in the future. Further analysis of the company's financial health and operational performance would provide a more comprehensive understanding of the factors influencing these fluctuations.