Archer-Daniels-Midland Company (ADM)
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 | 2,961,000 | 4,947,000 | 5,638,000 | 3,597,000 | 2,203,000 |
| Interest expense | US$ in thousands | 706,000 | 647,000 | 396,000 | 265,000 | 339,000 |
| Interest coverage | 4.19 | 7.65 | 14.24 | 13.57 | 6.50 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $2,961,000K ÷ $706,000K
= 4.19
Archer-Daniels-Midland Company's interest coverage ratio has shown fluctuations over the past five years. The interest coverage ratio represents the company's ability to meet its interest payment obligations. A higher ratio indicates a stronger ability to cover interest expenses.
As of December 31, 2020, the interest coverage ratio was 6.50, reflecting that the company's operating income was 6.50 times its interest expenses. This indicates moderate coverage of interest payments.
Subsequently, the interest coverage ratio improved significantly over the next two years, reaching 13.57 by December 31, 2021, and further increasing to 14.24 by December 31, 2022. These higher ratios demonstrate a stronger ability to cover interest costs, suggesting improved financial health and lower financial risk.
However, the interest coverage ratio decreased to 7.65 by December 31, 2023, and further dropped to 4.19 by December 31, 2024. These lower ratios indicate that the company's operating income may not be sufficient to cover its interest expenses. A declining interest coverage ratio could signal increased financial risk and may raise concerns about the company's ability to service its debt obligations.
Overall, while there have been fluctuations in Archer-Daniels-Midland Company's interest coverage ratio over the past five years, it is important for investors and stakeholders to closely monitor this ratio to assess the company's financial health and ability to meet its debt obligations.
Peer comparison
Dec 31, 2024