Armstrong World Industries Inc (AWI)
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 | 386,900 | 333,600 | 287,700 | 263,500 | -117,600 |
| Interest expense | US$ in thousands | 39,800 | 35,300 | 27,100 | 22,900 | 24,100 |
| Interest coverage | 9.72 | 9.45 | 10.62 | 11.51 | -4.88 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $386,900K ÷ $39,800K
= 9.72
The interest coverage ratio for Armstrong World Industries Inc has exhibited significant fluctuations over the past five years. At the end of December 31, 2020, the company's interest coverage ratio was negative, indicating that its earnings before interest and taxes (EBIT) were insufficient to cover its interest expenses. This could be a concern as a negative interest coverage ratio suggests potential financial distress.
However, the company's financial performance improved drastically in subsequent years. By December 31, 2021, the interest coverage ratio had increased to a healthy 11.51, suggesting that Armstrong World Industries Inc's EBIT was more than sufficient to cover its interest obligations. This significant improvement indicates a positive shift in the company's financial health.
Over the following years, Armstrong World Industries Inc maintained a relatively stable interest coverage ratio, ranging from 9.45 to 10.62. These values indicate that the company continued to generate strong earnings relative to its interest expenses, highlighting its ability to comfortably meet its debt obligations using its operating profits.
Overall, the trend in Armstrong World Industries Inc's interest coverage ratio reflects a substantial recovery from a negative position to a more stable and healthy level, indicating improved financial sustainability and the ability to service its debt obligations effectively.
Peer comparison
Dec 31, 2024