Williams Companies Inc (WMB)
Interest coverage
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 3,674,000 | 4,711,000 | 5,017,000 | 5,089,000 | 5,420,000 | 4,804,000 | 4,647,000 | 4,342,000 | 3,621,000 | 3,522,000 | 3,045,000 | 3,130,000 | 3,207,000 | 2,553,000 | 2,755,000 | 2,748,000 | 1,462,000 | 1,514,000 | 1,396,000 | 1,386,000 |
| Interest expense (ttm) | US$ in thousands | 1,364,000 | 1,348,000 | 1,324,000 | 1,291,000 | 1,236,000 | 1,203,000 | 1,180,000 | 1,155,000 | 1,147,000 | 1,153,000 | 1,154,000 | 1,171,000 | 1,179,000 | 1,174,000 | 1,174,000 | 1,170,000 | 1,172,000 | 1,180,000 | 1,184,000 | 1,186,000 |
| Interest coverage | 2.69 | 3.49 | 3.79 | 3.94 | 4.39 | 3.99 | 3.94 | 3.76 | 3.16 | 3.05 | 2.64 | 2.67 | 2.72 | 2.17 | 2.35 | 2.35 | 1.25 | 1.28 | 1.18 | 1.17 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $3,674,000K ÷ $1,364,000K
= 2.69
The interest coverage of Williams Companies Inc has shown a fluctuating trend over the period from March 31, 2020, to December 31, 2024.
The interest coverage ratio measures the company's ability to meet its interest obligations from its earnings before interest and taxes (EBIT). A higher interest coverage ratio indicates that the company is more capable of servicing its debt.
In the initial period, the interest coverage ratio was relatively low, ranging from 1.17 to 1.28. This suggests that the company's earnings were just enough to cover its interest expenses, indicating a potential risk of financial distress.
From March 31, 2021, onwards, there was a significant improvement in the interest coverage ratio, consistently exceeding 2.0. This indicates a stronger ability to cover interest payments using its operating income.
The interest coverage ratio continued to increase over the following periods, reaching its peak at 4.39 on December 31, 2023. This upward trend signifies the company's enhanced financial health and profitability.
However, there was a slight decline in the interest coverage ratio in the later periods, dropping to 2.69 on December 31, 2024. While this decrease may indicate a slight deterioration in the company's ability to cover its interest expenses, the ratio still remains above the critical threshold of 2.0.
In conclusion, the interest coverage ratio of Williams Companies Inc has shown improvement over the years, indicating a strengthening financial position and a better capacity to meet its interest obligations. However, monitoring the trend in the coming periods will be essential to assess the company's ongoing ability to service its debt.
Peer comparison
Dec 31, 2024