Xylem Inc (XYL)
Interest coverage
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 684,000 | 490,000 | 587,000 | 362,000 | 483,000 |
| Interest expense | US$ in thousands | 49,000 | 50,000 | 76,000 | 77,000 | 67,000 |
| Interest coverage | 13.96 | 9.80 | 7.72 | 4.70 | 7.21 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $684,000K ÷ $49,000K
= 13.96
Xylem Inc's interest coverage has shown fluctuating trends over the past five years. The interest coverage ratio measures a company's ability to cover its interest expenses with its earnings, with higher values indicating stronger financial health.
In 2023, Xylem Inc's interest coverage ratio increased to 14.86, indicating the company earned 14.86 times the amount of interest expenses in that year. This represents an improvement from the previous year, suggesting the company had sufficient earnings to comfortably cover its interest obligations.
The interest coverage ratio peaked in 2022 at 19.15, demonstrating a robust ability to meet interest payments with earnings. However, in 2021 and 2020, the interest coverage ratios were lower at 7.79 and 6.49, respectively, indicating a decline in the company's ability to cover its interest expenses with operating income during those years.
In 2019, the interest coverage ratio was 11.29, indicating a relatively healthy financial position compared to 2021 and 2020 but lower than the peak in 2022.
Overall, Xylem Inc's interest coverage has shown variability, with fluctuations possibly influenced by changes in operating income and interest expenses over the years. Investors and analysts may consider these trends when evaluating the company's financial stability and risk of default on interest payments.
Peer comparison
Dec 31, 2023