Avanos Medical Inc (AVNS)
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 | -385,800 | 50,700 | 40,100 | 27,500 | 13,900 | 22,000 | 32,900 | 44,900 | 60,200 | 58,300 | 52,000 | 33,600 | 12,000 | -57,700 | -64,300 | -58,600 | -44,900 | -2,400 | -19,300 | -25,500 |
| Interest expense (ttm) | US$ in thousands | 12,200 | 12,700 | 14,200 | 14,600 | 15,000 | 14,700 | 13,000 | 12,200 | 10,000 | 7,700 | 5,600 | 3,800 | 3,300 | 5,300 | 8,700 | 12,100 | 15,600 | 17,200 | 16,400 | 15,600 |
| Interest coverage | -31.62 | 3.99 | 2.82 | 1.88 | 0.93 | 1.50 | 2.53 | 3.68 | 6.02 | 7.57 | 9.29 | 8.84 | 3.64 | -10.89 | -7.39 | -4.84 | -2.88 | -0.14 | -1.18 | -1.63 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-385,800K ÷ $12,200K
= -31.62
The interest coverage ratio measures a company's ability to meet its interest obligations with its operating income. A higher interest coverage ratio indicates that the company is more capable of servicing its debt.
For Avanos Medical Inc, the interest coverage ratio was negative for most of the periods from March 2020 to December 2021, indicating that the company's operating income was insufficient to cover its interest expenses during that time. This may suggest potential financial distress or liquidity concerns.
However, from March 2022 onwards, the interest coverage ratio turned positive and experienced a significant improvement, reaching 9.29 in June 2022. This indicates a positive shift in the company's ability to meet its interest obligations using its operating income.
In the latter half of 2022 and through 2024, the interest coverage ratio ranged between 0.93 and -31.62. The negative ratio in December 2024 could imply challenges in generating enough operating income to cover interest expenses.
Overall, Avanos Medical Inc's interest coverage ratio has shown fluctuations over the years, with periods of both weakness and improvement. It would be crucial to closely monitor this ratio to assess the company's financial health and its ability to manage debt effectively.
Peer comparison
Dec 31, 2024