Wingstop Inc (WING)

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	112,594	91,933	73,756	57,390	42,901
Interest expense	US$ in thousands	18,227	21,230	14,984	16,782	17,136
Interest coverage		6.18	4.33	4.92	3.42	2.50

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $112,594K ÷ $18,227K
= 6.18

The interest coverage ratio measures the company's ability to meet its interest payments on its outstanding debt obligations. A higher interest coverage ratio indicates that the company is more capable of servicing its debt.

Analyzing Wingstop Inc's interest coverage over the past five years, we observe a positive trend. The interest coverage ratio has been consistently increasing, from 2.50 in 2019 to 6.18 in 2023. This indicates that Wingstop Inc's earnings are increasingly able to cover its interest expenses, reflecting improved financial health and reduced risk of default.

The gradual improvement in Wingstop Inc's interest coverage ratio suggests that the company's profitability and cash flow generation have been strengthening over the years. Investors and creditors may view this trend positively as it indicates a more sustainable financial position and a reduced likelihood of financial distress due to debt service obligations.

Overall, the increasing trend in Wingstop Inc's interest coverage ratio signifies a positive financial performance and management's ability to effectively manage the company's debt obligations.