Archer-Daniels-Midland Company (ADM)
Interest coverage
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 2,876,000 | 2,929,000 | 3,646,000 | 4,321,000 | 4,814,000 | 5,259,000 | 5,260,000 | 5,180,000 | 4,710,000 | 4,456,000 | 4,062,000 | 3,417,000 | 3,148,000 | 2,673,000 | 2,480,000 | 2,303,000 | 1,798,000 | 1,621,000 | 1,710,000 | 1,616,000 |
| Interest expense (ttm) | US$ in thousands | 706,000 | 692,000 | 673,000 | 666,000 | 647,000 | 616,000 | 558,000 | 451,000 | 396,000 | 339,000 | 303,000 | 270,000 | 265,000 | 257,000 | 296,000 | 343,000 | 339,000 | 365,000 | 362,000 | 384,000 |
| Interest coverage | 4.07 | 4.23 | 5.42 | 6.49 | 7.44 | 8.54 | 9.43 | 11.49 | 11.89 | 13.14 | 13.41 | 12.66 | 11.88 | 10.40 | 8.38 | 6.71 | 5.30 | 4.44 | 4.72 | 4.21 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $2,876,000K ÷ $706,000K
= 4.07
Archer-Daniels-Midland Company's interest coverage has shown a generally improving trend over the past few years. The interest coverage ratio, which indicates the company's ability to meet interest payments on its debt obligations, has gradually increased from 4.21 as of March 31, 2020, to a peak of 13.41 as of June 30, 2022. This upward trajectory suggests that the company's earnings before interest and taxes (EBIT) have been sufficient to cover its interest expenses comfortably.
However, after reaching its peak in mid-2022, the interest coverage ratio began to decline gradually. As of December 31, 2024, the interest coverage ratio stood at 4.07, reflecting a decrease from the peak levels seen in earlier periods. This decline could indicate a potential decrease in EBIT relative to interest expenses, highlighting a situation where the company may have been less able to cover its interest payments from its operating profits.
Overall, while the company has demonstrated a strong ability to cover its interest obligations in the past, the recent decline in the interest coverage ratio may warrant further monitoring to assess the company's financial health and its ability to manage its debt effectively.
Peer comparison
Dec 31, 2024