Avery Dennison Corp (AVY)
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 | 1,115,400 | 813,700 | 1,083,400 | 1,062,800 | 856,700 |
| Interest expense | US$ in thousands | 117,000 | 119,000 | 84,100 | 70,200 | 70,000 |
| Interest coverage | 9.53 | 6.84 | 12.88 | 15.14 | 12.24 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,115,400K ÷ $117,000K
= 9.53
Avery Dennison Corp's interest coverage ratio has exhibited fluctuations over the years, as indicated by the provided data. The interest coverage ratio measures the company's ability to service its interest expenses with its earnings before interest and taxes (EBIT).
As of December 31, 2020, Avery Dennison Corp had an interest coverage ratio of 12.24, indicating that the company generated earnings more than 12 times its interest expenses that year. This level suggests a strong capacity to meet its interest obligations comfortably.
By December 31, 2021, the interest coverage ratio improved to 15.14, signaling an even better ability to cover interest payments. This increase may have been driven by higher EBIT relative to interest expenses.
However, by the end of 2023, the interest coverage ratio dropped to 6.84, which could be concerning as it indicates that the company's ability to cover interest expenses weakened. A lower interest coverage ratio could imply increased financial risk and may warrant further investigation into the company's financial health.
As of December 31, 2024, the interest coverage ratio improved again to 9.53, although it remained below the levels seen in the previous years. It is essential for investors and stakeholders to monitor this ratio closely to ensure that Avery Dennison Corp maintains a healthy balance between earnings and interest expenses.
Peer comparison
Dec 31, 2024