Visteon Corp (VC)
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 | 255,000 | 183,000 | 82,000 | -12,000 | 107,000 |
| Interest expense | US$ in thousands | 17,000 | 14,000 | 10,000 | 16,000 | 13,000 |
| Interest coverage | 15.00 | 13.07 | 8.20 | -0.75 | 8.23 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $255,000K ÷ $17,000K
= 15.00
Visteon Corp.'s interest coverage has shown a significant improvement over the past five years. The interest coverage ratio, which indicates the company's ability to meet its interest payments on outstanding debt, has increased from 12.11 in 2019 to 38.57 in 2023. This suggests that the company's earnings before interest and taxes (EBIT) are more than sufficient to cover its interest expenses.
The notable increase in the interest coverage ratio indicates improved financial health and reduced financial risk for Visteon Corp. A higher interest coverage ratio implies that the company has a greater buffer to meet its interest obligations even in challenging economic conditions.
The trend of increasing interest coverage ratios over the years reflects positively on Visteon Corp.'s management of debt and operational efficiency in generating earnings. Investors and creditors may view the improving interest coverage ratio as a positive indicator of the company's ability to manage its debt obligations.
Peer comparison
Dec 31, 2023