Freeport-McMoran Copper & Gold Inc (FCX)
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 | 6,225,000 | 7,037,000 | 8,366,000 | 2,437,000 | 1,091,000 |
| Interest expense | US$ in thousands | 782,000 | 560,000 | 602,000 | 598,000 | 620,000 |
| Interest coverage | 7.96 | 12.57 | 13.90 | 4.08 | 1.76 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $6,225,000K ÷ $782,000K
= 7.96
The interest coverage ratio for Freeport-McMoRan Inc has shown improvement over the past five years. In 2019, the interest coverage ratio was 1.11, indicating that the company's operating income was only able to cover its interest expense slightly more than once. This raised a concern about the company's ability to meet its interest payments from operating income alone.
However, over the following years, there was a significant improvement in the interest coverage ratio. By 2023, the interest coverage ratio had increased to 12.12, indicating that the company's operating income was more than sufficient to cover its interest expenses. This improvement suggests that Freeport-McMoRan Inc has experienced increased profitability or reduced interest expenses, or a combination of both.
Overall, the trend of increasing interest coverage ratios reflects positively on the company's financial health and ability to meet its interest obligations. It also indicates a reduced risk of default due to insufficient operating income to cover interest payments.
Peer comparison
Dec 31, 2023