AdvanSix Inc (ASIX)

Interest coverage

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	56,886	61,490	20,843	10,494	76,708	129,172	150,598	191,249	228,573	215,161	260,576	234,015	190,141	189,864	131,310	87,572	60,866	26,306	35,431	40,468
Interest expense (ttm)	US$ in thousands	11,311	11,326	10,477	8,917	7,485	6,059	4,670	3,485	2,781	2,945	3,433	4,043	5,024	6,062	6,869	7,377	7,792	5,827	5,139	4,580
Interest coverage		5.03	5.43	1.99	1.18	10.25	21.32	32.25	54.88	82.19	73.06	75.90	57.88	37.85	31.32	19.12	11.87	7.81	4.51	6.89	8.84

December 31, 2024 calculation

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

The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt. A higher ratio indicates that the company is more capable of meeting its interest obligations using its operating income.

Analyzing AdvanSix Inc's interest coverage ratio over the past few years shows a fluctuating trend. As of March 31, 2020, the interest coverage ratio was 8.84, indicating that the company could cover its interest payments nearly 9 times with its operating income. The ratio then decreased to 6.89 by June 30, 2020, before further declining to 4.51 by September 30, 2020, suggesting a potential strain on the company's ability to meet its interest obligations during that period.

Subsequently, AdvanSix Inc's interest coverage ratio improved significantly, reaching 37.85 by December 31, 2021, and continued to rise to 82.19 by December 31, 2022, indicating a strong improvement in the company's ability to cover its interest expenses.

However, the interest coverage ratio began to decline in the following periods, dropping to 10.25 by December 31, 2023, and further decreasing to 5.03 by December 31, 2024. This downward trend may raise concerns about the company's ability to comfortably meet its interest payments in the future.

Overall, while AdvanSix Inc has shown fluctuations in its interest coverage ratio over the analyzed periods, it is important for stakeholders to closely monitor the ratio to ensure the company's financial health and ability to service its debt obligations.