AdvanSix Inc (ASIX)

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	56,886	76,708	228,572	190,139	62,825
Interest expense	US$ in thousands	11,311	7,485	2,781	5,023	7,792
Interest coverage		5.03	10.25	82.19	37.85	8.06

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $56,886K ÷ $11,311K
= 5.03

Based on the provided data, AdvanSix Inc's interest coverage ratio has shown significant fluctuations over the years.

As of December 31, 2020, the interest coverage ratio was 8.06, indicating that the company's earnings before interest and taxes (EBIT) were able to cover its interest expense 8.06 times.

By December 31, 2021, the interest coverage ratio improved significantly to 37.85, a substantial increase from the previous year. This suggests that AdvanSix Inc's ability to cover its interest payments with its operating income strengthened significantly.

The trend continued to strengthen by December 31, 2022, with an interest coverage ratio of 82.19, indicating an even higher level of financial flexibility and ability to cover interest expenses comfortably.

However, by December 31, 2023, the interest coverage ratio declined to 10.25, a substantial decrease compared to the previous year. This might indicate that the company's operating income was not as sufficient to cover its interest expenses as effectively.

Furthermore, as of December 31, 2024, the interest coverage ratio decreased further to 5.03, reaching a relatively lower level compared to the prior years. This decline might raise concerns about the company's ability to meet its interest payment obligations from its operating earnings.

In conclusion, while AdvanSix Inc has shown fluctuations in its interest coverage ratio over the years, it is essential for investors and stakeholders to monitor this metric closely to assess the company's financial health and ability to meet its debt obligations in the future.