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.