Xerox Corp (XRX)
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 | -991,000 | 170,000 | -126,000 | -265,000 | 471,000 |
| Interest expense | US$ in thousands | 225,000 | 198,000 | 199,000 | 207,000 | 215,000 |
| Interest coverage | -4.40 | 0.86 | -0.63 | -1.28 | 2.19 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $-991,000K ÷ $225,000K
= -4.40
Based on the interest coverage ratios provided for Xerox Corp, we can observe fluctuations over the years.
1. As of December 31, 2020, Xerox had an interest coverage ratio of 2.19, indicating that the company's operating income was 2.19 times its interest expense. This suggests that Xerox had a comfortable buffer to cover its interest obligations.
2. By December 31, 2021, the interest coverage ratio declined significantly to -1.28. A negative interest coverage ratio implies that Xerox's operating income was insufficient to cover its interest expenses. This raises concerns about the company's ability to meet its financial obligations.
3. The trend continued to deteriorate as of December 31, 2022, with an interest coverage ratio of -0.63. This indicates a further weakening of Xerox's ability to service its debt through operating income.
4. By December 31, 2023, there was a slight improvement in the interest coverage ratio to 0.86. While still below 1, this suggests a marginal increase in Xerox's ability to cover its interest payments compared to the previous year.
5. However, as of December 31, 2024, the interest coverage ratio plummeted to -4.40, indicating a significant decline in Xerox's financial health and its capacity to meet interest obligations using operating income.
Overall, the declining trend in Xerox's interest coverage ratios over the years raises concerns about the company's financial stability and ability to manage its debt effectively. Investors and stakeholders should closely monitor Xerox's financial performance and debt management strategies to assess the risks associated with its debt obligations.
Peer comparison
Dec 31, 2024