Allegheny Technologies Incorporated (ATI)
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 | 610,300 | 466,400 | 446,600 | 107,100 | -1,454,000 |
| Interest expense | US$ in thousands | 124,200 | 92,800 | 87,400 | 96,900 | 94,400 |
| Interest coverage | 4.91 | 5.03 | 5.11 | 1.11 | -15.40 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $610,300K ÷ $124,200K
= 4.91
The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. A ratio below 1 indicates that the company is not generating enough operating income to cover its interest expenses, which could raise concerns about its financial health and risk of default. Allegheny Technologies Incorporated's interest coverage ratio has shown improvement over the years, moving from a concerning -15.40 in 2020 to 1.11 in 2021, and further increasing to 5.11 in 2022. This upward trend suggests that the company's operating income is becoming more sufficient to cover its interest obligations. However, the ratio slightly dipped in 2023 to 5.03 and then again in 2024 to 4.91. While the ratios in 2022 and beyond indicate a healthier financial position compared to 2020 and 2021, it is important for the company to continue monitoring and managing its debt levels to ensure sustainable interest coverage in the future.