Xylem Inc (XYL)
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 | 1,009,000 | 684,000 | 490,000 | 587,000 | 362,000 |
| Interest expense | US$ in thousands | 44,000 | 49,000 | 50,000 | 76,000 | 77,000 |
| Interest coverage | 22.93 | 13.96 | 9.80 | 7.72 | 4.70 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,009,000K ÷ $44,000K
= 22.93
Interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. A higher ratio indicates that the company is more capable of servicing its debt.
Analyzing Xylem Inc's interest coverage from 2020 to 2024, we observe a positive trend. In 2020, the interest coverage was 4.70, indicating that the company earned 4.70 times more operating income than the interest expenses. This ratio improved steadily over the years, reaching 22.93 in 2024.
The consistent increase in interest coverage reflects Xylem Inc's improving ability to comfortably meet its interest obligations. A higher interest coverage ratio suggests lower financial risk and greater financial stability for the company, indicating a positive trend in its financial health.
Peer comparison
Dec 31, 2024