Crown Holdings Inc (CCK)
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 | 1,059,000 | 1,108,000 | 1,254,000 | -364,000 | 1,068,000 |
| Interest expense | US$ in thousands | 452,000 | 436,000 | 284,000 | 253,000 | 290,000 |
| Interest coverage | 2.34 | 2.54 | 4.42 | -1.44 | 3.68 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,059,000K ÷ $452,000K
= 2.34
Interest coverage is a financial ratio that measures a company's ability to pay interest expenses on its outstanding debt. For Crown Holdings Inc, the interest coverage ratio fluctuated over the years based on the provided data:
- As of December 31, 2020, the interest coverage ratio was 3.68, indicating that Crown Holdings was able to cover its interest payments nearly four times over with its earnings before interest and taxes (EBIT).
- By December 31, 2021, the interest coverage ratio declined significantly to -1.44, implying that Crown Holdings' EBIT was insufficient to cover its interest expenses during that period. A negative interest coverage ratio is a cause for concern as it suggests financial distress.
- However, by the end of 2022, the interest coverage ratio improved to 4.42, indicating that Crown Holdings' ability to cover its interest payments had strengthened.
- In 2023, the interest coverage ratio decreased to 2.54, which, although lower than the previous year, still suggests that the company's earnings were sufficient to cover its interest obligations.
- Finally, as of December 31, 2024, the interest coverage ratio further decreased to 2.34, signaling a slight reduction in Crown Holdings' ability to service its interest payments.
Overall, fluctuations in the interest coverage ratio reflect changes in Crown Holdings Inc's financial performance and ability to meet its debt obligations with its operating income. It is essential for the company to monitor and manage its interest coverage ratio to ensure financial stability and meet its debt obligations effectively.
Peer comparison
Dec 31, 2024