Avantor Inc (AVTR)
Interest coverage
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 695,300 | 1,116,900 | 970,400 | 369,900 | 480,600 |
| Interest expense | US$ in thousands | 284,800 | 265,800 | 217,400 | 307,600 | 440,000 |
| Interest coverage | 2.44 | 4.20 | 4.46 | 1.20 | 1.09 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $695,300K ÷ $284,800K
= 2.44
Avantor Inc's interest coverage ratio, which measures the company's ability to meet its interest obligations, has fluctuated over the past five years. In 2023, the interest coverage ratio stands at 2.44, indicating that the company generated earnings 2.44 times its interest expense for the year. This represents a decrease from the previous year's ratio of 4.20. The significant drop in the interest coverage ratio from 2022 to 2023 may raise concerns about Avantor's ability to cover its interest payments effectively with its earnings. Comparing to 2021 and 2020, where the interest coverage ratios were 4.46 and 1.20 respectively, the company has shown variability in its ability to cover interest expenses. It is worth noting that in 2019, Avantor's interest coverage was relatively low at 1.09, which may have indicated a potential financial risk at that time. Overall, investors and creditors should closely monitor Avantor's interest coverage ratio to assess the company's financial health and ability to meet its debt obligations in the future.
Peer comparison
Dec 31, 2023