Avery Dennison Corp (AVY)
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 | 813,700 | 1,083,400 | 1,058,900 | 803,600 | 322,700 |
| Interest expense | US$ in thousands | 119,000 | 84,100 | 70,200 | 70,000 | 75,800 |
| Interest coverage | 6.84 | 12.88 | 15.08 | 11.48 | 4.26 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $813,700K ÷ $119,000K
= 6.84
The interest coverage ratio for Avery Dennison Corp has shown some variability over the past five years. In 2023, the interest coverage ratio was 6.84, indicating that the company earned 6.84 times the amount needed to cover its interest expenses. This represents a significant decrease compared to the prior year, where the ratio was 12.88, signaling a potential weakening ability to cover interest payments.
In 2021, the interest coverage ratio was 15.08, which was the highest among the years provided. This suggests a strong ability to cover interest expenses with operating income. The ratio decreased slightly to 11.48 in 2020 but remained at a relatively healthy level. However, in 2019, the interest coverage ratio was 4.26, indicating a lower ability to cover interest payments compared to the subsequent years.
Overall, the trend in Avery Dennison Corp's interest coverage ratio fluctuated over the years, with 2023 showing a notable decline compared to prior years. It would be important to further investigate the reasons behind this decrease and monitor future trends in the interest coverage ratio to assess the company's financial health and debt servicing capabilities.
Peer comparison
Dec 31, 2023