Arch Resources Inc (ARCH)
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 | 566,373 | 1,099,450 | 363,419 | -330,190 | 250,532 |
| Interest expense | US$ in thousands | 14,821 | 20,461 | 23,972 | 14,432 | 16,485 |
| Interest coverage | 38.21 | 53.73 | 15.16 | -22.88 | 15.20 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $566,373K ÷ $14,821K
= 38.21
The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. A higher interest coverage ratio indicates a stronger ability to meet interest obligations.
Looking at Arch Resources Inc's interest coverage ratio over the past five years, we see a fluctuating trend. The ratio was significantly positive in 2019, 2021, 2022, and 2023, indicating a comfortable ability to cover interest expenses. The highest interest coverage ratio was in 2022 at 53.73, suggesting a strong financial position during that period.
However, in 2020, the interest coverage ratio was negative at -22.88, indicating that the company's operating income was insufficient to cover its interest expenses during that year. This negative ratio raises concerns about the company's financial health and its ability to meet debt obligations.
Overall, the fluctuating trend in Arch Resources Inc's interest coverage ratio suggests varying levels of financial stability and ability to cover interest expenses in recent years. Investors and creditors should closely monitor this ratio to assess the company's financial risk and debt repayment capabilities.
Peer comparison
Dec 31, 2023