American Axle & Manufacturing (AXL)

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	177,200	240,800	196,400	-398,200	-316,100
Interest expense	US$ in thousands	201,700	174,500	195,200	212,300	217,300
Interest coverage		0.88	1.38	1.01	-1.88	-1.45

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $177,200K ÷ $201,700K
= 0.88

The interest coverage ratio measures a company's ability to meet its interest obligations on outstanding debt with its operating income. A higher interest coverage ratio indicates a more comfortable position for the company to cover its interest expenses.

Looking at the historical data for American Axle & Manufacturing Holdings Inc, we can see that the interest coverage ratio has fluctuated over the past five years. In 2023, the interest coverage ratio decreased to 0.98 from 1.74 in 2022, indicating a decline in the company's ability to cover its interest expenses with its operating income. This decrease could suggest that the company may be at a higher risk of defaulting on its debt obligations.

In 2021, the interest coverage ratio was 1.59, slightly lower than the previous year, potentially signaling a slight weakening in the company's financial position to service its debt. The ratio dipped significantly to 0.91 in 2020, indicating a concerning decrease in the company's ability to cover its interest expenses with its operating income.

Conversely, in 2019, the interest coverage ratio was relatively healthier at 2.09, indicating a stronger ability to cover interest expenses compared to the following years.

Overall, the trend in American Axle & Manufacturing Holdings Inc's interest coverage ratio shows some fluctuation, with periods of both improvement and deterioration. It is important for investors and stakeholders to closely monitor this ratio to assess the company's financial health and its ability to service its debt obligations effectively.