Axalta Coating Systems Ltd (AXTA)
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 | 706,000 | 566,900 | 396,500 | 474,200 | 271,700 |
| Interest expense | US$ in thousands | 4,000 | 213,300 | 139,800 | 134,200 | 149,900 |
| Interest coverage | 176.50 | 2.66 | 2.84 | 3.53 | 1.81 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $706,000K ÷ $4,000K
= 176.50
The interest coverage ratio measures a company's ability to meet its interest obligations with its operating income. Looking at the data provided for Axalta Coating Systems Ltd, we can observe an interesting trend in the interest coverage ratio over the years.
As of December 31, 2020, Axalta's interest coverage ratio stood at 1.81, indicating that the company's operating income was just sufficient to cover its interest expenses. However, by December 31, 2021, the interest coverage ratio improved significantly to 3.53, reflecting a healthier financial position where the company's operating income could cover its interest payments more than twice over.
In the subsequent years, the interest coverage ratio fluctuated. By December 31, 2022, the ratio was 2.84, showing a slight decrease from the previous year but still indicating a comfortable level of coverage. In December 31, 2023, the ratio declined further to 2.66, suggesting a slight weakening of the company's ability to cover its interest expenses with operating income.
The most notable change occurred by December 31, 2024, with a significant spike in the interest coverage ratio to 176.50. Such a substantial increase may be driven by various factors, such as a sharp increase in operating income, a reduction in interest expenses, or a combination of both.
Overall, the analysis of Axalta Coating Systems Ltd's interest coverage ratio reveals fluctuations in the company's ability to cover its interest obligations over the years, with significant improvements in some periods and slight declines in others. This ratio is crucial in assessing the company's financial health and its capacity to meet debt obligations, thus indicating the need for continued monitoring and evaluation.
Peer comparison
Dec 31, 2024