Arcosa Inc (ACA)
Interest coverage
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 200,900 | 224,000 | 347,200 | 107,000 | 148,800 |
| Interest expense | US$ in thousands | 70,900 | 28,100 | 31,000 | 23,400 | 10,600 |
| Interest coverage | 2.83 | 7.97 | 11.20 | 4.57 | 14.04 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $200,900K ÷ $70,900K
= 2.83
The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt. Arcosa Inc's interest coverage ratio has varied over the years based on the provided data.
As of December 31, 2020, the interest coverage ratio was 14.04, indicating that Arcosa Inc generated 14 times the earnings needed to cover its interest payments. This suggests a strong ability to meet its interest obligations.
By December 31, 2021, the interest coverage ratio decreased to 4.57, reflecting a decline in the company's ability to cover its interest expenses. However, it was still above 1, indicating that Arcosa Inc was able to meet its interest payments with its earnings.
The ratio improved by December 31, 2022, with a ratio of 11.20, showing a better ability to cover interest payments compared to the previous year. This indicates a positive trend in the company's ability to manage its interest expenses.
On December 31, 2023, the interest coverage ratio decreased to 7.97, which is lower than the ratio in 2022. Although the ratio declined, Arcosa Inc was still generating sufficient earnings to cover its interest costs.
As of December 31, 2024, the interest coverage ratio dropped significantly to 2.83, indicating a notable decrease in Arcosa Inc's ability to cover its interest obligations with its earnings. This might raise concerns about the company's financial health and ability to service its debt.
In summary, Arcosa Inc's interest coverage ratio has shown fluctuations over the years, with some periods indicating strong ability to cover interest payments while others suggest a potential strain on the company's financial position. Investors and analysts may need to closely monitor this ratio to assess the company's ability to manage its debt obligations effectively.
Peer comparison
Dec 31, 2024