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', XP's interest coverage was 29.11, indicating the firm's ability to meet its interest obligations. Industry average for Investment Bankers/Brokers/Service in '2021' stood at 3.88.
• In '2022', XP's interest coverage was 9.56, indicating the firm's ability to meet its interest obligations. The decline from '2021' may indicate some operational or financial challenges. Industry average for Investment Bankers/Brokers/Service in '2022' stood at 1.24. Industry average declined by 2.64 from previous year.
• In '2023', XP's interest coverage was 7.37, indicating the firm's ability to meet its interest obligations. The decline from '2022' may indicate some operational or financial challenges. Industry average for Investment Bankers/Brokers/Service in '2023' stood at 2.62. Industry average increased by 1.38 compared to previous year.
• In '2024', XP's interest coverage was 7.40, indicating the firm's ability to meet its interest obligations. The increase since '2023' reflects strengthening financial performance. Industry average for Investment Bankers/Brokers/Service in '2024' stood at 3.25. Industry average increased by 0.63 compared to previous year.
Overall, XP's interest coverage has been volatile but showed a downward trend over the past 4 years.

Formula: Interest Coverage = EBIT / Interest Expense

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