Avanos Medical Inc (AVNS)
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 | -391,100 | 4,500 | 36,700 | -29,400 | -44,900 |
| Interest expense | US$ in thousands | 12,200 | 15,000 | 10,000 | 3,300 | 15,600 |
| Interest coverage | -32.06 | 0.30 | 3.67 | -8.91 | -2.88 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $-391,100K ÷ $12,200K
= -32.06
Avanos Medical Inc's interest coverage ratio has been fluctuating significantly over the years based on the provided data.
As of December 31, 2020, the interest coverage ratio was -2.88, indicating that the company's operating income was not sufficient to cover its interest expenses. This raises concerns about the company's ability to meet its debt obligations from its earnings.
By December 31, 2021, the interest coverage ratio deteriorated further to -8.91, suggesting a worsening financial situation where the company's operating income fell even more relative to its interest expenses.
However, there was a positive turn by December 31, 2022, where the interest coverage ratio improved to 3.67. This indicates that the company's operating income had increased sufficiently to cover its interest payments, showing a potential for enhanced financial stability.
The following year, by December 31, 2023, the interest coverage ratio dropped to 0.30, falling below 1.0, which is a concerning sign as it implies that the company may have difficulty meeting its interest obligations with its current earnings.
The most alarming figure comes from December 31, 2024, with an interest coverage ratio of -32.06, indicating a severe decline in the company's ability to cover interest expenses, possibly risking default or financial distress.
Overall, the trend in Avanos Medical Inc's interest coverage ratio shows inconsistency and volatility, underscoring the need for the company to closely monitor its financial position and take necessary steps to improve its ability to meet interest payments in the long term.
Peer comparison
Dec 31, 2024