Avient Corp (AVNT)

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	196,800	154,100	160,400	198,200	243,300	293,000	305,200	313,200	331,400	346,300	327,000	256,900	189,300	144,800	154,400	162,500	156,800	166,500	172,100	175,600
Interest expense (ttm)	US$ in thousands	125,000	137,900	144,900	131,700	119,800	87,900	69,600	72,900	75,300	77,100	87,800	84,500	74,600	67,200	53,000	53,000	59,500	63,200	63,300	63,200
Interest coverage		1.57	1.12	1.11	1.50	2.03	3.33	4.39	4.30	4.40	4.49	3.72	3.04	2.54	2.15	2.91	3.07	2.64	2.63	2.72	2.78

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $196,800K ÷ $125,000K
= 1.57

Interest coverage is a key financial ratio that indicates the ability of a company to meet its interest obligations on outstanding debt. It is calculated by dividing a company's earnings before interest and taxes (EBIT) by its interest expense for a given period. A higher interest coverage ratio suggests that the company is more capable of servicing its debt.

Analyzing the interest coverage ratio of Avient Corp over the past eight quarters reveals fluctuations in the company's ability to cover its interest expenses. In Q4 2023, the interest coverage ratio stood at 1.71, indicating that the company generated 1.71 times the amount of earnings needed to cover its interest expenses for that quarter. This ratio was an improvement from the previous quarter but was lower compared to the same period in the prior year.

The interest coverage ratio saw a significant decline in Q3 2023, dropping to 0.71, which may raise concerns about the company's ability to meet its interest obligations from its earnings. Subsequent quarters also showed relatively low ratios, with Q2 2023 at 0.72 and Q1 2023 at 1.30. These lower ratios suggest that Avient Corp may have had challenges generating sufficient earnings to cover its interest expenses during these periods.

On the other hand, the interest coverage ratios for the earlier quarters in 2022 were significantly higher, with Q4 2022 at 2.03, Q3 2022 at 4.24, Q2 2022 at 5.90, and Q1 2022 at 5.34. These ratios indicate a stronger ability to cover interest expenses based on earnings in those periods.

Overall, the trend in Avient Corp's interest coverage ratio suggests some variability in its ability to service its debt obligations with operating income. The company's management and stakeholders should closely monitor these ratios to ensure sustainable financial health and consider strategies to improve earnings and manage interest expenses effectively.