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', VRT's interest coverage was 2.83, indicating the firm's ability to meet its interest obligations. Industry average for Industrial Machinery/Components in '2021' stood at 2.55.
• In '2022', VRT's interest coverage was 2.13, indicating the firm's ability to meet its interest obligations. The decline from '2021' may indicate some operational or financial challenges. Industry average for Industrial Machinery/Components in '2022' stood at 2.35. Industry average declined by 0.20 from previous year.
• In '2023', VRT's interest coverage was 3.96, indicating the firm's ability to meet its interest obligations. The increase since '2022' reflects strengthening financial performance. Industry average for Industrial Machinery/Components in '2023' stood at 2.19. Industry average declined by 0.16 from previous year.
• In '2024', VRT's interest coverage was 6.09, indicating the firm's ability to meet its interest obligations. The increase since '2023' reflects strengthening financial performance. Industry average for Industrial Machinery/Components in '2024' stood at 2.43. Industry average increased by 0.25 compared to previous year.
Overall, VRT's interest coverage has been volatile but showed an upward trend over the past 4 years.

Formula: Interest Coverage = EBIT / Interest Expense

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