Watts Water Technologies Inc (WTS)
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 | 400,700 | 357,700 | 314,600 | 240,400 | 180,300 |
| Interest expense | US$ in thousands | 14,700 | 8,200 | 7,000 | 6,300 | 13,300 |
| Interest coverage | 27.26 | 43.62 | 44.94 | 38.16 | 13.56 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $400,700K ÷ $14,700K
= 27.26
Interest coverage is a critical financial ratio that indicates a company's ability to meet its interest obligations with its operating earnings.
Watts Water Technologies Inc has showcased a strong interest coverage ratio over the last five years, with the ratio steadily increasing from 13.56 in 2020 to 38.16 in 2021, and further improving to 44.94 in 2022. This indicates that the company's operating earnings are more than sufficient to cover its interest expenses, demonstrating a healthy financial position.
In 2023, the interest coverage ratio remains high at 43.62, reflecting continued strength in the company's ability to meet its interest payments comfortably. However, there is a slight decrease in 2024 with the interest coverage ratio dropping to 27.26. While this still shows adequate coverage, it might warrant further scrutiny to understand any potential factors driving this decline.
Overall, the consistent upward trend in Watts Water Technologies Inc's interest coverage ratios is a positive sign of the company's financial health and ability to manage its debt obligations effectively.
Peer comparison
Dec 31, 2024