Xerox Corp (XRX)
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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | -991,000 | -1,072,000 | 66,000 | -62,000 | 170,000 | 393,000 | -46,000 | 43,000 | -126,000 | -979,000 | -510,000 | -404,000 | -265,000 | 557,000 | 597,000 | 528,000 | 471,000 | 1,258,000 | 1,427,000 |
| Interest expense (ttm) | US$ in thousands | 225,000 | 228,000 | 215,000 | 201,000 | 198,000 | 188,000 | 193,000 | 196,000 | 199,000 | 202,000 | 205,000 | 208,000 | 207,000 | 213,000 | 220,000 | 216,000 | 215,000 | 216,000 | 217,000 |
| Interest coverage | -4.40 | -4.70 | 0.31 | -0.31 | 0.86 | 2.09 | -0.24 | 0.22 | -0.63 | -4.85 | -2.49 | -1.94 | -1.28 | 2.62 | 2.71 | 2.44 | 2.19 | 5.82 | 6.58 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-991,000K ÷ $225,000K
= -4.40
The interest coverage ratio of Xerox Corp has shown fluctuating trends over the specified time period. It was relatively stable and healthy in 2020 and early 2021, ranging between 5.82 and 6.58, indicating the company's ability to comfortably meet its interest obligations. However, from December 2021 onwards, the interest coverage ratio deteriorated significantly, falling into negative territory. This suggests that Xerox Corp may have been facing challenges in generating sufficient earnings to cover its interest expenses.
The consecutive negative interest coverage ratios up to September 2022 indicate a concerning situation where the company's earnings were not adequate to cover its interest payments. The negative values imply that Xerox had insufficient operating income to service its debt obligations, raising potential solvency risks.
From March 2023 onwards, the interest coverage ratio started to show signs of improvement, moving back into positive territory and reaching 2.09 by September 2023. This recovery suggests that Xerox may have implemented strategic measures to enhance its earnings or manage its debt structure more effectively to better cover its interest costs.
However, the interest coverage ratio remained volatile and negative at times in the subsequent quarters, indicating ongoing challenges in maintaining a consistent ability to cover interest payments. Overall, monitoring Xerox Corp's interest coverage ratio is crucial to assess its financial health and ability to manage its debt obligations effectively.
Peer comparison
Dec 31, 2024