Albemarle Corp (ALB)

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	251,881	2,470,060	798,434	505,812	666,123
Interest expense	US$ in thousands	77,770	34,604	53,010	33,081	30,317
Interest coverage		3.24	71.38	15.06	15.29	21.97

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $251,881K ÷ $77,770K
= 3.24

Albemarle Corp.'s interest coverage ratio has displayed fluctuations over the past five years. The trend indicates a generally healthy ability to cover interest expenses with operating income.

In 2023, the interest coverage ratio stands at 17.53, reflecting a comfortable cushion to meet interest obligations with operating earnings. This suggests a strong ability to service debt, contributing to financial stability.

The ratio peaked in 2022 at 26.43, indicating a significant improvement from the preceding year. This spike signifies a robust capacity to cover interest expenses, implying efficient management of debt and operational profitability.

In 2021, the interest coverage ratio decreased to 9.73, but it remained above the industry average, indicating a moderate ability to pay interest with operating income. Despite the drop, the company maintained a satisfactory level of coverage.

The ratio was 8.66 in 2020, suggesting a slight decrease in the ability to cover interest charges with operating profit compared to the previous year. While still indicating an ability to meet interest obligations, this level might raise some concerns about debt servicing capacity.

Finally, in 2019, the interest coverage ratio was 13.79, indicating a strong ability to cover interest expenses with operating income, reflecting favorable financial health.

Overall, Albemarle Corp. has demonstrated varying levels of interest coverage over the past five years, with recent years showing a trend of relatively strong performance in managing interest expenses.