Api Group Corp (APG)
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 | 476,000 | 377,000 | 228,000 | 136,000 | -132,000 |
| Interest expense | US$ in thousands | 146,000 | 145,000 | 125,000 | 60,000 | 52,000 |
| Interest coverage | 3.26 | 2.60 | 1.82 | 2.27 | -2.54 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $476,000K ÷ $146,000K
= 3.26
The interest coverage ratio of Api Group Corp demonstrates a notable fluctuation over the specified period, reflecting variations in the company's ability to meet its interest obligations from its earnings before interest and taxes (EBIT).
As of December 31, 2020, the company reported an interest coverage ratio of -2.54. This negative figure indicates that Api Group Corp's EBIT was insufficient to cover its interest expenses during that year, suggesting the company faced significant operational or financial difficulties, potentially resulting in losses and an inability to service interest obligations adequately.
In the following year, 2021, the interest coverage ratio improved markedly to positive 2.27. This shift signifies a substantial enhancement in profitability or operational efficiency, enabling the company to generate sufficient earnings to cover its interest expenses more comfortably. An interest coverage ratio above 2 generally indicates a reasonable capacity to meet interest payments, although further context is required to assess financial stability comprehensively.
The subsequent year, 2022, saw a slight decline to a ratio of 1.82. While still positive, the decrease suggests a marginal reduction in profitability or an increase in interest expenses relative to EBIT, potentially signaling emerging challenges in maintaining prior levels of financial robustness.
In 2023, the ratio increased again to 2.60, indicating an improved ability to cover interest expenses. This upward movement reflects a potentially favorable operational performance or strategic adjustments that enhanced the company's earnings capacity.
Looking ahead to 2024, the interest coverage ratio is projected to rise further to 3.26. This anticipated increase suggests continued or renewed financial strengthening, with the company expected to have a more comfortable margin of safety in covering its interest obligations. Such an improvement may be driven by increased revenues, better cost management, or a reduction in interest expenses.
Overall, the trend from 2020 through 2024 illustrates a significant recovery and stabilization in Api Group Corp's financial health concerning its interest coverage. The initial negative ratio highlights previous financial distress, whereas subsequent positive ratios reflect progressive improvements in profitability and operational efficiency, positioning the company with enhanced capacity to meet debt service requirements in the upcoming years.
Peer comparison
Dec 31, 2024