Waste Management Inc (WM)
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 | 4,063,000 | 3,575,000 | 3,365,000 | 2,965,000 | 2,434,000 |
| Interest expense | US$ in thousands | 728,000 | 590,000 | 425,000 | 388,000 | 473,000 |
| Interest coverage | 5.58 | 6.06 | 7.92 | 7.64 | 5.15 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $4,063,000K ÷ $728,000K
= 5.58
Interest coverage ratio is a key financial metric that indicates a company's ability to meet its interest payments on outstanding debt. Waste Management Inc's interest coverage has shown a generally positive trend over the past five years.
In 2020, the interest coverage ratio was 5.15, suggesting that the company generated operating income 5.15 times greater than its interest expenses. This ratio improved significantly to 7.64 in 2021, indicating even stronger ability to cover interest payments.
Continuing the positive trend, Waste Management Inc's interest coverage ratio further increased to 7.92 in 2022, showcasing the company's continued financial stability. However, there was a slight decline in 2023 to 6.06, which could indicate a potential decrease in operating income relative to interest expenses during that period.
In the most recent year presented, 2024, the interest coverage ratio stands at 5.58, which is lower than the ratios in 2022 and 2023 but still higher than the 2020 level. This suggests that Waste Management Inc may need to closely monitor its ability to cover interest payments in the future.
Overall, Waste Management Inc's interest coverage ratio indicates a solid position in managing its interest obligations, with favorable ratios in recent years, although some fluctuations were observed. It is crucial for the company to maintain a healthy interest coverage ratio to ensure financial sustainability and attract investors.
Peer comparison
Dec 31, 2024