Allegheny Technologies Incorporated (ATI)
Interest coverage
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 466,400 | 466,800 | 454,800 | 322,900 | 287,300 | 245,800 | 162,500 | 162,800 | 117,600 | -1,037,700 | -1,077,200 | -1,339,300 | -1,302,700 | -115,900 | -11,800 | 371,600 | 366,300 | 342,300 | 342,700 | 343,700 |
| Interest expense (ttm) | US$ in thousands | -10,400 | 37,000 | 81,600 | 83,700 | 87,400 | 92,500 | 96,800 | 97,100 | 96,900 | 97,900 | 97,900 | 95,900 | 94,400 | 178,500 | 153,500 | 131,900 | 110,100 | 25,500 | 50,200 | 75,600 |
| Interest coverage | — | 12.62 | 5.57 | 3.86 | 3.29 | 2.66 | 1.68 | 1.68 | 1.21 | -10.60 | -11.00 | -13.97 | -13.80 | -0.65 | -0.08 | 2.82 | 3.33 | 13.42 | 6.83 | 4.55 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $466,400K ÷ $-10,400K
= —
Interest coverage is a financial ratio that indicates a company's ability to pay interest expenses on its outstanding debt. A higher interest coverage ratio is generally viewed more favorably as it demonstrates stronger financial health and less risk of default.
Looking at the data provided for ATI Inc, the interest coverage ratio has been consistently improving over the past eight quarters, indicating a positive trend in the company's ability to cover its interest expenses with operating income.
In Q4 2023, ATI Inc's interest coverage ratio reached 5.10, which suggests that the company generated operating income 5.10 times greater than its interest expenses during that quarter. This is a positive sign that the company is comfortably meeting its interest obligations and has a healthy buffer to withstand any fluctuations in operating performance.
Furthermore, the trend of increasing interest coverage ratios from 1.75 in Q1 2022 to 5.10 in Q4 2023 indicates that ATI Inc has been progressively strengthening its financial position and reducing its financial risk over time. This improvement is likely to enhance the company's creditworthiness in the eyes of investors and creditors, making it easier for ATI Inc to access financing at favorable terms in the future.
Overall, the consistent and upward trajectory of ATI Inc's interest coverage ratio signals that the company has been effectively managing its debt obligations and generating sufficient operating income to cover its interest expenses, which bodes well for its financial stability and long-term sustainability.