CF Industries Holdings Inc (CF)
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 | 1,901,000 | 2,398,000 | 5,439,000 | 2,189,000 | 642,000 |
| Interest expense | US$ in thousands | 139,000 | 150,000 | 344,000 | 184,000 | 179,000 |
| Interest coverage | 13.68 | 15.99 | 15.81 | 11.90 | 3.59 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,901,000K ÷ $139,000K
= 13.68
Interest coverage is a key financial ratio that measures a company's ability to meet its interest obligations with its operating income. A higher interest coverage ratio indicates a better ability to handle interest expenses.
Analyzing the interest coverage ratio of CF Industries Holdings Inc over the past few years, we observe a steady improvement from 3.59 in December 2020 to 11.90 in December 2021, significantly increasing to 15.81 in December 2022, and further enhancing to 15.99 in December 2023. However, there was a slight decrease to 13.68 in December 2024.
The consistent increase in the interest coverage ratio from 2020 to 2023 demonstrates the company's strengthening ability to cover its interest expenses with its operating income. This positive trend indicates improved financial health and lower risk of default due to interest payment obligations.
The slight decrease in the interest coverage ratio in 2024 should be monitored closely to ensure that CF Industries Holdings Inc continues to generate sufficient operating income to comfortably cover its interest expenses in the future.
Peer comparison
Dec 31, 2024