Axalta Coating Systems Ltd (AXTA)
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 | 566,900 | 396,500 | 474,200 | 271,700 | 489,000 |
| Interest expense | US$ in thousands | 213,300 | 139,800 | 134,200 | 149,900 | 162,600 |
| Interest coverage | 2.66 | 2.84 | 3.53 | 1.81 | 3.01 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $566,900K ÷ $213,300K
= 2.66
Interest coverage is a key financial ratio that indicates a company's ability to meet its interest obligations with its operating income. The trend analysis of Axalta Coating Systems Ltd's interest coverage ratio over the past five years reveals fluctuations in the company's ability to cover its interest payments.
In 2023, the interest coverage ratio decreased to 2.75 from 3.03 in 2022, indicating that the company's operating income was able to cover its interest expenses 2.75 times. This decline in interest coverage may raise concerns about the company's ability to meet its interest obligations comfortably.
Compared to the peak of 3.45 in 2021, the interest coverage ratio has shown a downward trend. The ratio was at a low point of 2.04 in 2020, signifying potential challenges in meeting interest payments from operating income during that year. However, the ratio improved to 3.00 in 2019, indicating a stronger ability to cover interest expenses.
Overall, the declining trend in Axalta Coating Systems Ltd's interest coverage ratio highlights the importance of monitoring the company's ability to generate sufficient operating income to cover its interest obligations. Investors and creditors may consider this trend when assessing the company's financial health and risk profile.
Peer comparison
Dec 31, 2023