Chemours Co (CC)

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 391,000 -110,000 913,000 888,000 447,000
Interest expense US$ in thousands 264,000 208,000 163,000 185,000 210,000
Interest coverage 1.48 -0.53 5.60 4.80 2.13

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $391,000K ÷ $264,000K
= 1.48

Interest coverage ratio measures a company's ability to meet its interest obligations by comparing its operating income to its interest expenses.

For Chemours Co, the interest coverage ratio has shown some fluctuations over the years. In December 31, 2020, the ratio was 2.13, indicating that the company's operating income could cover its interest expenses 2.13 times. This ratio improved significantly to 4.80 in December 31, 2021, and continued to increase to 5.60 by December 31, 2022. These improvements suggest that Chemours Co has been more efficient in generating earnings to cover its interest payments.

However, there was a significant decline in the interest coverage ratio to -0.53 by December 31, 2023, indicating that the company's operating income was not sufficient to cover its interest expenses, raising concerns about its financial health and ability to meet its debt obligations.

The ratio slightly recovered to 1.48 by December 31, 2024, but it still remains below the industry benchmark of 2 or more, signaling that Chemours Co may continue to face challenges in meeting its interest obligations in the near term.

Overall, while Chemours Co has shown improvements in its interest coverage ratio in recent years, the sharp decline in 2023 and the ratio remaining below the industry benchmark in 2024 suggest that the company should closely monitor its financial performance and work towards increasing its earnings to ensure better coverage of its interest expenses.