United Parcel Service Inc (UPS)
Interest coverage
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 8,441,000 | 8,771,000 | 8,134,000 | 8,988,000 | 9,795,000 | 10,002,000 | 11,945,000 | 12,834,000 | 13,817,000 | 13,828,000 | 13,637,000 | 13,338,000 | 12,954,000 | 6,097,000 | 5,576,000 | 4,652,000 | 2,876,000 | 6,773,000 | 6,421,000 | 6,126,000 |
| Interest expense (ttm) | US$ in thousands | 866,000 | 844,000 | 813,000 | 792,000 | 785,000 | 760,000 | 738,000 | 718,000 | 704,000 | 695,000 | 695,000 | 691,000 | 694,000 | 696,000 | 695,000 | 711,000 | 701,000 | 692,000 | 675,000 | 651,000 |
| Interest coverage | 9.75 | 10.39 | 10.00 | 11.35 | 12.48 | 13.16 | 16.19 | 17.87 | 19.63 | 19.90 | 19.62 | 19.30 | 18.67 | 8.76 | 8.02 | 6.54 | 4.10 | 9.79 | 9.51 | 9.41 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $8,441,000K ÷ $866,000K
= 9.75
United Parcel Service Inc's interest coverage ratio has shown fluctuations over the past few years. The ratio was relatively stable at around 9 to 10 from March 2020 to June 2021, indicating the company's ability to cover its interest expenses comfortably with its operating income. However, there was a significant decline in the interest coverage ratio in December 2021, dropping to 4.10, which may suggest a higher financial risk and potentially a strain on the company's ability to meet its interest payment obligations.
Subsequently, there was a notable improvement in the interest coverage ratio from March 2022 to December 2022, with the ratio consistently above 18. This indicates a strong improvement in the company's ability to cover its interest expenses, reflecting better profitability or lower interest costs.
However, from March 2023 to December 2024, the interest coverage ratio started declining gradually, reaching 9.75 by the end of December 2024. While the ratio is still above 1, signaling that the company is generating enough operating income to cover its interest expenses, the declining trend may suggest potential challenges in maintaining consistent profitability or managing its debt levels effectively.
Overall, the analysis of United Parcel Service Inc's interest coverage ratio demonstrates a mix of stable performance, improvements, and some signs of weakening financial health over the period under review. Investors and analysts may want to further investigate the factors driving these fluctuations to assess the company's financial sustainability and risk profile.
See also:
United Parcel Service Inc Interest Coverage (Quarterly Data)