Graphic Packaging Holding Company (GPK)
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 | 1,172,000 | 1,152,000 | 1,161,000 | 1,047,000 | 913,000 | 727,000 | 554,000 | 494,000 | 401,000 | 435,200 | 417,200 | 424,200 | 338,200 | 302,700 | 303,600 | 325,900 | 423,800 | 435,500 | 473,700 | 449,600 |
| Interest expense (ttm) | US$ in thousands | 239,000 | 234,000 | 225,000 | 213,000 | 197,000 | 178,000 | 154,000 | 135,000 | 123,000 | 121,000 | 124,000 | 125,000 | 129,000 | 130,600 | 134,500 | 140,000 | 141,000 | 140,000 | 135,100 | 129,900 |
| Interest coverage | 4.90 | 4.92 | 5.16 | 4.92 | 4.63 | 4.08 | 3.60 | 3.66 | 3.26 | 3.60 | 3.36 | 3.39 | 2.62 | 2.32 | 2.26 | 2.33 | 3.01 | 3.11 | 3.51 | 3.46 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,172,000K ÷ $239,000K
= 4.90
To analyze Graphic Packaging Holding Co's interest coverage, we look at the trend in the interest coverage ratio over the past eight quarters. The interest coverage ratio is a measure of a company's ability to meet its interest obligations on its debt. It is calculated by dividing earnings before interest and taxes (EBIT) by the amount of interest expense.
Based on the data provided in the table, we observe a generally positive trend in Graphic Packaging's interest coverage ratio from Q1 2022 to Q4 2023. The interest coverage ratio has consistently remained above 4, which is considered a healthy level indicating that the company generates enough operating income to cover its interest expenses.
Specifically, the interest coverage ratio has ranged from 4.64 to 5.69 over the past eight quarters, with the highest ratio observed in Q1 2023 and the lowest in Q1 2022. This demonstrates that Graphic Packaging has been able to comfortably cover its interest payments throughout this period.
Furthermore, the increasing trend in the interest coverage ratio from Q1 2022 to Q4 2023 indicates improving financial health and stability for Graphic Packaging. A higher interest coverage ratio suggests that the company is more capable of servicing its debt obligations and is less vulnerable to financial distress.
Overall, based on the consistent and relatively high interest coverage ratios displayed by Graphic Packaging Holding Co over the analyzed period, it can be inferred that the company has a strong capacity to handle its interest payments and is in a favorable financial position in terms of debt servicing ability.
Peer comparison
Dec 31, 2023