AGCO Corporation (AGCO)
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 | -122,100 | 1,470,600 | 1,232,200 | 1,030,800 | 639,700 |
| Interest expense | US$ in thousands | 93,000 | 68,800 | 46,000 | 25,400 | 24,900 |
| Interest coverage | -1.31 | 21.38 | 26.79 | 40.58 | 25.69 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $-122,100K ÷ $93,000K
= -1.31
AGCO Corporation's interest coverage ratio has shown variability over the years. As of December 31, 2020, the interest coverage ratio was 25.69, indicating that the company's earnings before interest and taxes (EBIT) was sufficient to cover its interest expenses. The ratio improved significantly to 40.58 by December 31, 2021, reflecting a stronger ability to cover interest payments.
However, the interest coverage ratio decreased to 26.79 by December 31, 2022, suggesting a slight decline in the company's ability to cover interest expenses with its operating earnings. The ratio further dropped to 21.38 by December 31, 2023, signaling a potential strain on AGCO Corporation's ability to meet interest obligations from its earnings.
The most concerning observation is the negative interest coverage ratio of -1.31 as of December 31, 2024. A negative ratio implies that the company's EBIT is insufficient to cover its interest expenses, raising concerns about its financial health and ability to manage its debt obligations. AGCO Corporation may need to closely monitor its interest expenses and explore strategies to improve its earnings to enhance its overall financial stability.
Peer comparison
Dec 31, 2024