Darling Ingredients Inc (DAR)

Interest coverage ratio is a key financial metric used to assess a company's ability to meet its interest obligations on outstanding debt. It is calculated by dividing earnings before interest and taxes (EBIT) by the interest expense. A higher interest coverage ratio indicates a greater capacity to cover interest payments.

Based on the provided data for Darling Ingredients Inc, the interest coverage ratio has shown fluctuations over the years. As of December 31, 2020, the company's interest coverage ratio was 5.82, indicating that its EBIT could cover the interest expense nearly 6 times. This ratio improved significantly to 14.13 by December 31, 2021, reflecting a stronger ability to service interest payments.

However, the interest coverage ratio decreased to 8.04 by December 31, 2022, and further dropped to 3.73 by December 31, 2023. These lower ratios suggest that the company's ability to cover interest expenses declined during those periods. It is important for investors and creditors to monitor these trends closely as declining interest coverage ratios could indicate potential financial distress.

Interestingly, the interest coverage ratio experienced a substantial increase to 83.31 by December 31, 2024, showcasing a remarkable improvement in Darling Ingredients Inc's ability to meet its interest obligations. Such a high ratio indicates a significantly strengthened capacity to handle interest payments, which could be attributed to improved profitability or lower interest expenses.

Overall, the varying interest coverage ratios for Darling Ingredients Inc reflect fluctuations in its ability to cover interest payments over the years, highlighting the importance of monitoring this metric to assess the company's financial health and debt servicing capabilities.

Peer comparison

Dec 31, 2024