FMC Corporation (FMC)
Interest coverage
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 555,600 | 932,000 | 1,041,800 | 1,145,500 | 1,144,300 | 1,021,800 | 1,026,900 | 1,078,400 | 1,034,500 | 909,400 | 889,700 | 870,200 | 902,200 | 867,400 | 831,300 | 831,200 | 821,600 | 887,000 | 832,200 | 697,700 |
| Interest expense (ttm) | US$ in thousands | 237,200 | 225,300 | 202,500 | 173,300 | 151,800 | 140,000 | 131,300 | 128,600 | 131,100 | 132,300 | 134,700 | 142,800 | 151,200 | 159,900 | 166,000 | 164,800 | 158,500 | 147,000 | 138,800 | 133,700 |
| Interest coverage | 2.34 | 4.14 | 5.14 | 6.61 | 7.54 | 7.30 | 7.82 | 8.39 | 7.89 | 6.87 | 6.61 | 6.09 | 5.97 | 5.42 | 5.01 | 5.04 | 5.18 | 6.03 | 6.00 | 5.22 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $555,600K ÷ $237,200K
= 2.34
Based on the data provided, FMC Corp.'s interest coverage ratio has shown a declining trend over the past quarters. The interest coverage ratio measures the company's ability to pay its interest expenses on outstanding debt with its operating income. A higher interest coverage ratio is generally seen as favorable, indicating a company has more than enough earnings to cover its interest obligations.
In Q1 2022, FMC Corp. had a robust interest coverage ratio of 9.34, showing a strong ability to meet its interest expenses. However, this ratio has steadily decreased over subsequent quarters to 3.24 in Q4 2023. This declining trend suggests that the company's operating income may not be sufficient to cover its interest payments as comfortably as before.
A decreasing interest coverage ratio could indicate potential financial distress, as it implies the company may be at a higher risk of defaulting on its debt obligations. Investors and creditors may view this trend negatively, as it indicates a weakening financial position. FMC Corp. should closely monitor and address this declining trend in interest coverage to ensure its long-term financial stability.
Peer comparison
Dec 31, 2023