The Wendy’s Co (WEN)
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 | 403,479 | 365,824 | 349,763 | 270,532 | 287,452 |
| Interest expense | US$ in thousands | 124,061 | 122,319 | 109,185 | 117,737 | 115,971 |
| Interest coverage | 3.25 | 2.99 | 3.20 | 2.30 | 2.48 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $403,479K ÷ $124,061K
= 3.25
Interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. Wendy's Co has shown relatively stable interest coverage over the past five years, ranging from a low of 2.46 in Dec 29, 2019 to a high of 3.15 in Jan 2, 2022. This indicates that the company's earnings before interest and taxes (EBIT) are sufficient to cover its interest expenses, with a recent ratio of 3.07 as of Dec 31, 2023. This suggests that Wendy's Co has a comfortable cushion to handle its interest obligations, reflecting a good financial health in terms of managing debt.
Peer comparison
Dec 31, 2023
Company name
Symbol
Interest coverage
The Wendy’s Co
WEN
3.25
Shake Shack Inc
SHAK
10.47
Starbucks Corporation
SBUX
9.84