Dow Inc (DOW)
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 | 2,459,000 | 1,453,000 | 6,789,000 | 8,868,000 | 2,918,000 |
| Interest expense | US$ in thousands | 944,000 | 868,000 | 757,000 | 817,000 | 916,000 |
| Interest coverage | 2.60 | 1.67 | 8.97 | 10.85 | 3.19 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $2,459,000K ÷ $944,000K
= 2.60
The interest coverage ratio for Dow Inc has shown fluctuations over the period analyzed. As of December 31, 2020, the interest coverage stood at 3.19, indicating that the company generated operating income 3.19 times more than its interest expenses. Subsequently, there was a significant improvement by December 31, 2021, with the ratio increasing to 10.85, signaling a stronger ability to cover interest payments. In the following year, as of December 31, 2022, the interest coverage remained relatively favorable at 8.97.
However, there was a noticeable decline by December 31, 2023, with the ratio dropping to 1.67. This lower ratio suggests that the company's operating income may not be sufficient to cover its interest obligations adequately. The ratio improved slightly by December 31, 2024, reaching 2.60, but it still remains below the levels seen in previous years.
Overall, the trend in Dow Inc's interest coverage ratio indicates some variability in its ability to meet interest payments from operating income. It is essential for investors and stakeholders to monitor this ratio closely to assess the company's financial health and ability to manage its debt obligations effectively.
Peer comparison
Dec 31, 2024