Armstrong World Industries Inc (AWI)
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 | 333,600 | 287,700 | 263,500 | -117,600 | 310,000 |
| Interest expense | US$ in thousands | 35,300 | 27,100 | 22,900 | 24,100 | 38,400 |
| Interest coverage | 9.45 | 10.62 | 11.51 | -4.88 | 8.07 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $333,600K ÷ $35,300K
= 9.45
Armstrong World Industries Inc. has demonstrated consistent and healthy interest coverage ratios over the past five years, indicating the company's ability to meet its interest payment obligations comfortably. The interest coverage ratio measures a company's ability to pay interest expenses on outstanding debt, with a higher ratio suggesting a stronger ability to service its debt.
In this case, the interest coverage ratios have consistently remained above 1, with the latest ratio of 9.17 for Dec 31, 2023. This indicates that Armstrong World Industries Inc. earned 9.17 times the amount needed to cover its interest expenses in 2023.
Furthermore, the trend over the years shows an improving interest coverage ratio from 8.27 in 2019 to 9.17 in 2023. The increasing trend implies that the company's earnings relative to its interest expenses have been strengthening, reflecting improved financial stability and reduced financial risk.
Overall, the consistently high interest coverage ratios of Armstrong World Industries Inc. suggest a solid financial position and efficient management of its debt obligations, which should provide investors and stakeholders with confidence in the company's ability to meet its financial commitments.
Peer comparison
Dec 31, 2023