Alcoa Corp (AA)

Interest coverage is an important financial ratio that indicates a company's ability to meet its interest obligations through its operating income. Looking at Alcoa Corp's interest coverage over the years, we observe the following:

1. In December 2020, the interest coverage was 1.18, indicating that the company's operating income was only sufficient to cover its interest expenses by a small margin. This may raise concerns about the company's ability to service its debt obligations comfortably.

2. By December 2021, the interest coverage improved significantly to 6.15, signaling that Alcoa Corp generated enough operating income to comfortably cover its interest expenses. This improvement suggests a stronger financial position compared to the previous year.

3. In December 2022, the interest coverage increased further to 6.62, indicating continued improvement in the company's ability to meet its interest obligations. This trend is generally viewed positively by investors and creditors as it demonstrates financial stability.

4. However, there was a significant decline in interest coverage to -5.46 by December 2023. A negative interest coverage ratio is a red flag, suggesting that the company's operating income was insufficient to cover its interest expenses. This could indicate financial distress and warrant further investigation.

5. In December 2024, the interest coverage rebounded to 5.62, showing a recovery from the previous year's negative ratio. While the improvement is positive, it is essential for stakeholders to monitor the company's financial performance closely to ensure sustained improvement in interest coverage ratio.

Overall, analyzing Alcoa Corp's interest coverage over the years reveals fluctuations in the company's ability to meet its interest obligations. It is crucial for investors and creditors to consider the trend in interest coverage ratio as part of their assessment of the company's financial health and debt repayment capacity.

Peer comparison

Dec 31, 2024