Watsco Inc (WSO)
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 | 745,047 | 717,407 | 734,215 | 740,932 | 785,377 | 815,612 | 795,248 | 816,640 | 822,867 | 810,847 | 781,393 | 711,079 | 625,632 | 573,678 | 523,660 | 436,126 | 399,489 | 381,354 | 349,892 | 355,043 |
| Interest expense (ttm) | US$ in thousands | 23,339 | 17,626 | 5,360 | 8,775 | 6,920 | 5,934 | 4,527 | 2,222 | 2,165 | 2,390 | 2,128 | 1,466 | 996 | 815 | 702 | 537 | 1,239 | 1,791 | 3,117 | 4,046 |
| Interest coverage | 31.92 | 40.70 | 136.98 | 84.44 | 113.49 | 137.45 | 175.67 | 367.52 | 380.08 | 339.27 | 367.20 | 485.05 | 628.14 | 703.90 | 745.95 | 812.15 | 322.43 | 212.93 | 112.25 | 87.75 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $745,047K ÷ $23,339K
= 31.92
The interest coverage ratio of Watsco Inc has displayed fluctuations over the period from March 31, 2020, to December 31, 2024. This ratio indicates the company's ability to meet its interest obligations with its earnings before interest and taxes (EBIT).
The interest coverage ratio started at a strong level of 87.75 on March 31, 2020, and improved significantly to 322.43 by December 31, 2020. This upward trend continued into the next year, reaching its peak at 812.15 on March 31, 2021. However, the ratio experienced a decline over the following quarters, dropping to 31.92 by December 31, 2024.
The decreasing trend in the interest coverage ratio indicates a potential risk as the company's EBIT may not be sufficient to cover its interest payments. This could signal potential financial stress and the need for closer monitoring of the company's ability to service its debt obligations.
Overall, it is essential for stakeholders to closely monitor Watsco Inc's interest coverage ratio to ensure the company's financial health and solvency.