Vontier Corp (VNT)
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 | 537,000 | 543,400 | 577,900 | 582,200 | 468,200 |
| Interest expense | US$ in thousands | 74,700 | 94,700 | 67,500 | 37,100 | 800 |
| Interest coverage | 7.19 | 5.74 | 8.56 | 15.69 | 585.25 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $537,000K ÷ $74,700K
= 7.19
Interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt. A higher ratio indicates a company is more capable of meeting its interest obligations.
Analyzing Vontier Corp's interest coverage ratio over the years, we see a significant decline from 2020 to 2024. In December 2020, the interest coverage ratio was exceptionally high at 585.25, suggesting a strong ability to cover interest payments. However, the ratio steadily decreased to 15.69 by December 2021, indicating a decline in the company's ability to cover its interest expenses.
Moreover, the trend continued with the interest coverage ratio further dropping to 8.56 in December 2022, 5.74 in December 2023, and slightly improving to 7.19 by December 2024. This declining trend may signal potential financial risk as it implies a decreasing ability to service debt through earnings.
Overall, the declining interest coverage ratio of Vontier Corp suggests a deteriorating financial situation in terms of its ability to cover interest payments with operating income. Further investigation into the company's financial health and strategies to improve its interest coverage may be warranted to mitigate financial risks.
Peer comparison
Dec 31, 2024