Watsco Inc (WSO)
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 | 751,274 | 794,810 | 831,578 | 628,528 | 401,034 |
| Interest expense | US$ in thousands | 20,869 | 4,920 | 2,165 | 996 | 1,239 |
| Interest coverage | 36.00 | 161.55 | 384.10 | 631.05 | 323.68 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $751,274K ÷ $20,869K
= 36.00
Based on the provided data, the interest coverage ratio for Watsco Inc has shown fluctuations over the years. In December 31, 2020, the interest coverage ratio was 323.68, indicating a strong ability to meet interest obligations. This ratio improved significantly to 631.05 by December 31, 2021, reflecting even greater capacity to cover interest expenses.
However, there was a notable decline in the interest coverage ratio to 384.10 by December 31, 2022, although it still remained at a satisfactory level. The ratio further dropped to 161.55 as of December 31, 2023, indicating a decrease in the company's ability to cover interest payments comfortably.
By December 31, 2024, the interest coverage ratio decreased significantly to 36.00, signaling a potential concern regarding Watsco Inc's ability to meet its interest obligations with its current earnings. It is important for the company to closely monitor and manage its interest coverage ratio to ensure financial stability and meet debt obligations effectively.