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.