Alamo Group Inc (ALG)
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 | 201,213 | 148,671 | 120,031 | 95,594 | 95,346 |
| Interest expense | US$ in thousands | 26,093 | 14,361 | 10,533 | 15,837 | 10,747 |
| Interest coverage | 7.71 | 10.35 | 11.40 | 6.04 | 8.87 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $201,213K ÷ $26,093K
= 7.71
Alamo Group Inc.'s interest coverage ratio has displayed fluctuations over the past five years. The interest coverage ratio measures the company's ability to cover its interest expenses with operating income. A higher ratio indicates a stronger ability to meet interest obligations.
In 2023, the interest coverage ratio stands at 8.04, representing a decrease from the prior year but still above 1, indicating that the company's operating income is sufficient to cover its interest expenses. The ratio of 10.92 in 2022 was even higher, showing a strong ability to cover interest.
The interest coverage ratio peaked in 2021 at 12.46, reflecting a substantial increase and a robust ability to meet interest payments. However, in 2020, the ratio dipped to 6.44, which was lower compared to the previous years, indicating a potential strain on the ability to cover interest expenses.
In 2019, the interest coverage ratio was 9.94, showing a slightly better ability to cover interest compared to 2023. Overall, the fluctuations in the interest coverage ratio imply varying levels of financial stability and ability to service debt over the five-year period.
Peer comparison
Dec 31, 2023