Alpha Metallurgical Resources Inc (AMR)
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 | 214,561 | 852,382 | 1,576,550 | 361,852 | -169,106 |
| Interest expense | US$ in thousands | 3,811 | 6,923 | 21,802 | 69,654 | 74,528 |
| Interest coverage | 56.30 | 123.12 | 72.31 | 5.19 | -2.27 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $214,561K ÷ $3,811K
= 56.30
Interest coverage is a crucial financial metric that assesses a company's ability to meet its interest obligations with its earnings. Examining Alpha Metallurgical Resources Inc's interest coverage ratio over the years reveals important insights into the company's financial health.
As of December 31, 2020, Alpha Metallurgical Resources Inc's interest coverage ratio was negative at -2.27, indicating that the company's operating income was insufficient to cover its interest expenses, raising concerns about its financial stability.
However, by December 31, 2021, the interest coverage ratio improved significantly to 5.19, suggesting that the company's operating income grew sufficiently to cover its interest payments. This improvement is a positive sign for the company's financial performance and indicates an enhanced ability to service its debt.
The trend continued to show remarkable progress in the following years. By December 31, 2022, the interest coverage ratio surged to 72.31, reflecting a substantial increase in earnings relative to interest expenses. This sharp improvement indicates a significant enhancement in Alpha Metallurgical Resources Inc's financial position and a strong ability to manage its debt obligations comfortably.
The trend of improving interest coverage continued into the subsequent years, reaching 123.12 on December 31, 2023. This exceptionally high ratio reaffirms the company's robust earnings capacity and its ability to comfortably cover its interest costs, signifying a solid financial footing.
However, the interest coverage ratio exhibited a slight decline by December 31, 2024, dropping to 56.30. Although lower compared to the previous year, this ratio still indicates a healthy ability to meet interest payments using operating income.
Overall, Alpha Metallurgical Resources Inc's interest coverage ratios have shown a positive trajectory, transitioning from negative levels to significantly favorable levels over the years. This improvement underscores the company's enhanced financial strength, ability to service its debt, and mitigate financial risks.
Peer comparison
Dec 31, 2024