The Andersons Inc (ANDE)
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 | 82,950 | 138,556 | 171,121 | 133,893 | -1,911 |
| Interest expense | US$ in thousands | 31,760 | 332 | 413 | 679 | 1,289 |
| Interest coverage | 2.61 | 417.34 | 414.34 | 197.19 | -1.48 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $82,950K ÷ $31,760K
= 2.61
The interest coverage ratio measures a company's ability to meet its interest expenses with its operating income. In the case of The Andersons Inc, there has been significant improvement in its interest coverage over the years. Starting from a negative figure in 2020, indicating an inability to cover interest expenses with operating income, the ratio surged to a very healthy level of 417.34 in 2023, which indicates that the company's operating income is more than sufficient to cover its interest expenses.
This remarkable improvement suggests that The Andersons Inc has substantially strengthened its financial position and profitability, thus reducing its financial risk. However, it is worth noting that the interest coverage ratio dipped in 2024 to a lower level of 2.61. While this is a significant decrease from the peak in 2023, the ratio is still above 1, implying that the company's operating income is still sufficient to cover its interest payments, albeit to a lesser extent.
Overall, the trend in The Andersons Inc's interest coverage ratio demonstrates a positive trajectory, with the company significantly enhancing its ability to meet its interest obligations from its operating profits. It is important for stakeholders to monitor this ratio closely to ensure that the company maintains a healthy financial position relative to its interest expenses.
Peer comparison
Dec 31, 2024