Alcoa Corp (AA)
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 | -355,000 | 647,000 | 1,253,000 | 163,000 | -589,000 |
| Interest expense | US$ in thousands | 107,000 | 106,000 | 195,000 | 146,000 | 121,000 |
| Interest coverage | -3.32 | 6.10 | 6.43 | 1.12 | -4.87 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $-355,000K ÷ $107,000K
= -3.32
The interest coverage ratio of Alcoa Corp has fluctuated over the past five years. In 2023, the interest coverage ratio was negative, indicating that the company's earnings were insufficient to cover its interest expenses. This negative ratio could signal financial distress and potential difficulty in meeting debt obligations. In contrast, in 2022 and 2021, the interest coverage ratios were relatively healthy at 12.82 and 10.65 respectively, demonstrating that the company's earnings were substantially higher than its interest expenses. This indicates a strong ability to meet interest payments comfortably.
In 2020, the interest coverage ratio dropped to 2.64, a significant decrease from the previous year. This decrease may raise concerns about the company's ability to cover its interest costs with its earnings. However, the ratio rebounded in 2019 to 6.83, signaling an improvement in the company's ability to cover interest expenses compared to the previous year.
Overall, the trend in Alcoa Corp's interest coverage ratio shows variability, with periods of strong coverage followed by decreases in coverage levels. It is essential for investors and stakeholders to monitor this ratio closely to assess the company's financial health and its ability to meet its debt obligations.
Peer comparison
Dec 31, 2023