Alamo Group Inc (ALG)
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 | 170,176 | 201,213 | 148,592 | 116,938 | 99,585 |
| Interest expense | US$ in thousands | 20,548 | 26,093 | 14,361 | 10,533 | 15,837 |
| Interest coverage | 8.28 | 7.71 | 10.35 | 11.10 | 6.29 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $170,176K ÷ $20,548K
= 8.28
The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. Looking at Alamo Group Inc's interest coverage over the past five years, we can observe an improving trend.
As of December 31, 2020, the interest coverage ratio was 6.29, indicating that the company generated 6.29 times the amount of earnings needed to cover its interest expenses for that year. This suggests a moderate ability to meet interest obligations.
By December 31, 2021, the interest coverage ratio had increased to 11.10, signifying a significant improvement in the company's ability to cover its interest payments. This indicates a stronger financial position and a reduced risk of default due to interest obligations.
In the following years, Alamo Group maintained a relatively high level of interest coverage with ratios of 10.35 on December 31, 2022, 7.71 on December 31, 2023, and 8.28 on December 31, 2024. These figures show that the company continued to have a healthy ability to service its debt obligations through its operating profits.
Overall, the trend of increasing interest coverage ratios reflects positively on Alamo Group Inc's financial stability and ability to manage its debt burden effectively over the analyzed period.
Peer comparison
Dec 31, 2024