Astec Industries Inc (ASTE)
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 | 51,500 | 7,400 | 14,800 | 45,200 | 26,700 |
| Interest expense | US$ in thousands | 8,900 | 2,500 | 1,100 | 700 | 1,400 |
| Interest coverage | 5.79 | 2.96 | 13.45 | 64.57 | 19.07 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $51,500K ÷ $8,900K
= 5.79
Interest coverage is a financial ratio that indicates a company's ability to service its interest payments on outstanding debt with its operating income. A higher interest coverage ratio is generally considered positive as it suggests the company has more than enough operating income to cover its interest expenses.
Analyzing Astec Industries Inc.'s interest coverage ratio over the past five years, we see a significant decline from 2019 to 2023. In 2019, the interest coverage ratio was exceptionally high at 161.49, indicating a strong ability to cover interest payments. However, this ratio steadily decreased to 41.00 in 2021, 11.00 in 2022, and further dropped to 8.00 in 2023.
The significant decline in the interest coverage ratio raises concerns about Astec Industries Inc.'s ability to cover its interest expenses with its operating income in recent years. A declining trend in the interest coverage ratio may indicate increasing financial risk and potential difficulties in meeting debt obligations.
It is important for investors and creditors to closely monitor Astec Industries Inc.'s interest coverage ratio going forward to assess the company's financial health and ability to manage its debt effectively. Further analysis and understanding of the factors contributing to the declining interest coverage ratio are essential for making informed investment decisions regarding the company.
Peer comparison
Dec 31, 2023