Name: Interest Coverage

Definition: Interest coverage tells you how easily the company can pay interest on its debt using operating profits. It’s like asking: “Can the company comfortably make its loan payments, or is it barely scraping by?” The higher the ratio, the safer. A very low ratio means debt payments may strain the business, especially if profits drop.

Interpretation:
• In '2021', CDW's interest coverage was 9.60, indicating the firm's ability to meet its interest obligations. Industry average for Catalog/Specialty Distribution in '2021' stood at 1.38.
• In '2022', CDW's interest coverage was 7.31, indicating the firm's ability to meet its interest obligations. The decline from '2021' may indicate some operational or financial challenges. Industry average for Catalog/Specialty Distribution in '2022' stood at -1.70. Industry average declined by 3.08 from previous year.
• In '2023', CDW's interest coverage was 7.40, indicating the firm's ability to meet its interest obligations. The increase since '2022' reflects strengthening financial performance. Industry average for Catalog/Specialty Distribution in '2023' stood at -0.17. Industry average increased by 1.53 compared to previous year.
• In '2024', CDW's interest coverage was 7.69, indicating the firm's ability to meet its interest obligations. The increase since '2023' reflects strengthening financial performance. Industry average for Catalog/Specialty Distribution in '2024' stood at 1.77. Industry average increased by 1.93 compared to previous year.
Overall, CDW's interest coverage has consistently declined during the past 4 years.

Formula: Interest Coverage = EBIT / Interest Expense

Good Range: Minimum 3-5 desirable; below 1 is risky.