American Axle & Manufacturing (AXL)

Interest coverage

		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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	177,200	200,600	234,800	237,500	240,800	176,400	144,500	146,600	196,400	302,700	417,600	146,800	-398,200	-912,900	-1,171,800	-854,600	-316,100	-300,100	-59,600	33,200
Interest expense (ttm)	US$ in thousands	201,700	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	217,300	217,700	218,300	216,500
Interest coverage		0.88	1.04	1.25	1.32	1.38	1.00	0.80	0.78	1.01	1.49	2.02	0.69	-1.88	-4.28	-5.48	-3.97	-1.45	-1.38	-0.27	0.15

December 31, 2023 calculation

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

American Axle & Manufacturing Holdings Inc's interest coverage ratio has displayed a fluctuating trend over the past eight quarters. The interest coverage ratio measures the company's ability to cover its interest payments with its operating income. A higher ratio indicates a stronger ability to meet interest expenses.

In the most recent quarter of Q4 2023, the interest coverage ratio was at 0.98, which signifies that the company's operating income was not sufficient to cover its interest expenses by a margin of less than 1. This raises concerns about the company's financial health and its ability to service its debt obligations.

Looking back over the previous quarters, the interest coverage ratio has shown some variability. It ranged from a low of 0.98 in Q4 2023 to a high of 1.74 in Q4 2022. While there have been fluctuations, the ratios generally stayed around the range of 1.1 to 1.7.

A consistent interest coverage ratio below 1 may indicate that the company is struggling to generate enough operating income to cover its interest expenses, which could lead to potential financial difficulties and default risks. On the other hand, a ratio above 1 suggests that the company is earning enough to cover its interest payments, although a higher ratio is generally preferred for financial stability and security.

It is crucial for stakeholders, including investors and creditors, to monitor American Axle & Manufacturing Holdings Inc's interest coverage ratio closely to assess the company's financial strength and its ability to meet its debt obligations in the long term.