Century Aluminum Company (CENX)
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 | 31,800 | -150,200 | 66,000 | -80,500 | -66,200 |
| Interest expense | US$ in thousands | 35,500 | 29,300 | 30,400 | 31,600 | 23,000 |
| Interest coverage | 0.90 | -5.13 | 2.17 | -2.55 | -2.88 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $31,800K ÷ $35,500K
= 0.90
Interest coverage ratio is a financial metric used to evaluate a company's ability to cover its interest expenses with its operating income. A higher interest coverage ratio indicates that a company is more capable of meeting its interest obligations.
Looking at Century Aluminum Company's interest coverage ratios over the past five years, we can see significant fluctuations. In 2023, the interest coverage ratio was 0.90, which indicates that the company's operating income was just sufficient to cover its interest expenses. However, in 2022, the ratio was -5.13, suggesting that the company's operating income was insufficient to cover its interest expenses, which raises concerns about the company's ability to meet its debt obligations.
The interest coverage ratio improved in 2021 to 2.17, showing that the company's operating income was more than twice its interest expenses. However, in 2020 and 2019, the ratios were negative (-2.55 and -2.88, respectively), indicating that the company's operating income was not enough to cover its interest payments during those years.
Overall, Century Aluminum Company's fluctuating interest coverage ratios indicate varying levels of financial stability and ability to service its debt over the years. Investors and creditors should closely monitor these ratios to assess the company's financial health and ability to meet its debt obligations.
Peer comparison
Dec 31, 2023