Albemarle Corp (ALB)

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	-1,776,540	251,881	2,470,060	798,434	505,812
Interest expense	US$ in thousands	49,000	77,770	34,604	53,010	33,081
Interest coverage		-36.26	3.24	71.38	15.06	15.29

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $-1,776,540K ÷ $49,000K
= -36.26

Interest coverage is a key financial ratio that indicates a company's ability to meet its interest obligations on outstanding debt. In the case of Albemarle Corp, the interest coverage ratio has shown some fluctuations over the years.

As of December 31, 2020, Albemarle Corp had an interest coverage ratio of 15.29, which indicates that the company was generating 15.29 times the earnings needed to cover its interest expenses. This suggests a healthy financial position with ample earnings to meet interest obligations.

The ratio remained relatively stable as of December 31, 2021, at 15.06, still demonstrating a strong ability to cover interest payments.

However, there was a significant increase in the interest coverage ratio as of December 31, 2022, reaching 71.38. This sharp increase signals a substantial improvement in Albemarle Corp's ability to service its debt obligations, indicating robust earnings relative to interest expenses.

On the contrary, the interest coverage ratio decreased notably as of December 31, 2023, falling to 3.24. This decline might raise concerns about the company's ability to comfortably cover its interest expenses with earnings.

As of December 31, 2024, the interest coverage ratio turned negative, standing at -36.26. A negative interest coverage ratio indicates that the company's earnings are insufficient to cover its interest expenses, which could raise questions about its financial health and ability to meet debt obligations.

In conclusion, while Albemarle Corp demonstrated strong interest coverage ratios in some years, the significant fluctuations and the negative ratio in 2024 suggest variability in the company's financial performance and potential challenges in meeting its interest obligations in the future.