Autoliv Inc (ALV)
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 | 983,000 | 705,000 | 663,000 | 674,000 | 364,200 |
| Interest expense | US$ in thousands | 108,000 | 93,000 | 60,000 | 60,000 | 73,000 |
| Interest coverage | 9.10 | 7.58 | 11.05 | 11.23 | 4.99 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $983,000K ÷ $108,000K
= 9.10
Interest coverage ratio measures a company's ability to cover its interest obligations with its earnings before interest and taxes (EBIT). A higher ratio indicates that the company is more capable of meeting its interest payments from its operating income.
Autoliv Inc's interest coverage has shown a positive trend over the past five years, starting at 4.99 in December 2020 and gradually increasing to 9.10 by December 2024. This indicates that the company's ability to cover its interest expenses with its operating income has improved significantly over this period.
The interest coverage ratio exceeding 1 suggests Autoliv Inc generated more than enough EBIT to cover its interest expenses in each of the years presented. The substantial increase in the ratio from 2020 to 2024 demonstrates improved financial strength and lowered risk of defaulting on interest payments.
Overall, the consistent increase in Autoliv Inc's interest coverage ratio reflects a positive trend in the company's financial health and ability to meet its debt obligations through its operational earnings.
Peer comparison
Dec 31, 2024