Whirlpool Corporation (WHR)
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 | 143,000 | 909,000 | -1,064,000 | 2,476,000 | 1,646,000 |
| Interest expense | US$ in thousands | 358,000 | 351,000 | 190,000 | 175,000 | 189,000 |
| Interest coverage | 0.40 | 2.59 | -5.60 | 14.15 | 8.71 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $143,000K ÷ $358,000K
= 0.40
Whirlpool Corporation's interest coverage ratio, which measures the company's ability to cover its interest expenses with its operating income, has exhibited significant fluctuations over the past five years.
As of December 31, 2020, Whirlpool's interest coverage stood at 8.71, indicating that the company generated operating income nearly nine times higher than its interest expenses. This level of interest coverage suggests a healthy financial position and the ability to comfortably meet its debt obligations.
By December 31, 2021, Whirlpool's interest coverage improved further to 14.15, reflecting a substantial increase in its ability to cover interest costs with operating income. This uptrend is a positive sign of the company's strong financial health and cash flow generation capacity.
However, the interest coverage ratio took a significant downturn by December 31, 2022, plummeting to -5.60. This negative interest coverage indicates that Whirlpool's operating income was insufficient to cover its interest expenses during that period. A negative interest coverage ratio is a red flag for investors and creditors, suggesting potential financial distress and an increased risk of default.
The company managed to improve its interest coverage slightly by December 31, 2023, with a ratio of 2.59. While still low, this indicates a partial recovery in the company's ability to meet its interest obligations. Whirlpool may need to focus on increasing profitability or reducing debt to strengthen its financial position.
By December 31, 2024, Whirlpool's interest coverage dropped further to 0.40, indicating a significant decline in its ability to cover interest expenses with operating income. This sharp decrease raises concerns about the company's financial stability and its ability to manage its debt burden effectively.
In conclusion, Whirlpool Corporation's interest coverage ratio has shown fluctuations over the past five years, ranging from strong coverage to negative coverage. Investors and stakeholders should closely monitor future financial performance to assess the company's ability to meet its interest obligations and sustain long-term financial health.
Peer comparison
Dec 31, 2024