American Axle & Manufacturing (AXL)

Interest coverage

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Earnings before interest and tax (EBIT) (ttm) US$ in thousands 251,400 252,200 236,400 210,300 171,400 194,500 237,300 238,800 271,600 206,600 166,700 164,300 217,900 353,200 484,300 213,200 -362,400 -905,200 -1,173,300 -848,800
Interest expense (ttm) US$ in thousands 186,000 194,000 199,600 201,900 203,400 193,800 187,800 180,300 174,500 176,700 181,600 188,800 195,200 203,000 207,200 211,900 212,300 213,400 213,800 215,400
Interest coverage 1.35 1.30 1.18 1.04 0.84 1.00 1.26 1.32 1.56 1.17 0.92 0.87 1.12 1.74 2.34 1.01 -1.71 -4.24 -5.49 -3.94

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $251,400K ÷ $186,000K
= 1.35

American Axle & Manufacturing's interest coverage ratio, as indicated by the provided data, shows a fluctuating trend over the analyzed time period. The interest coverage ratio is a measure of a company's ability to make interest payments on its debt. A ratio below 1 indicates that the company is not generating enough operating income to cover its interest expenses.

From March 31, 2020 to December 31, 2021, the interest coverage ratio remained consistently below 1, indicating that the company was unable to cover its interest expenses with its operating income during this time frame. However, starting from March 31, 2021, there was a gradual improvement in the interest coverage ratio, with the ratio moving above 1. This suggests that the company's operating income started to better cover its interest expenses.

The interest coverage ratio continued to improve further into 2022 and 2023, reaching its peak in September 30, 2022, and June 30, 2023, showing a more stable financial position in terms of meeting interest payment obligations. However, there was a slight decline in the ratio towards the end of the analyzed period, although it remained above 1, indicating that the company's operating income still covered its interest expenses.

Overall, the trend in American Axle & Manufacturing's interest coverage ratio shows an improvement in its ability to cover interest expenses with operating income from 2021 onwards, reflecting a positive direction in the company's financial health in this aspect.