Wabash National Corporation (WNC)
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 | 313,936 | 166,448 | 24,418 | -85,020 | 145,071 |
| Interest expense | US$ in thousands | 19,854 | 20,525 | 23,128 | 24,194 | 27,340 |
| Interest coverage | 15.81 | 8.11 | 1.06 | -3.51 | 5.31 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $313,936K ÷ $19,854K
= 15.81
The interest coverage ratio for Wabash National Corp. has shown a fluctuating trend over the past five years. In 2023, the interest coverage improved significantly to 15.68, indicating that the company's operating income is more than sufficient to cover its interest expense. This suggests that the company has a strong ability to meet its interest obligations from its operating profits.
The interest coverage ratio was also healthy in 2019 and 2022 at 5.22 and 8.15, respectively, indicating a comfortable cushion between operating income and interest expenses.
However, in 2020, there was a notable decline in the interest coverage ratio to 0.82, signaling a potential concern as the company's operating income was only just able to cover its interest payments. This could indicate increased financial risk and the need for better management of debt.
The most significant improvement in the interest coverage ratio was observed in 2021 at 2.64, showing some recovery from the previous year's decline but still below ideal levels. Overall, Wabash National Corp. should focus on maintaining a healthy interest coverage ratio to ensure financial stability and mitigate the risk of defaulting on debt obligations.