Howmet Aerospace Inc (HWM)
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 | 1,565,000 | 1,193,000 | 995,000 | 825,000 | 552,000 |
| Interest expense | US$ in thousands | 182,000 | 218,000 | 229,000 | 259,000 | 381,000 |
| Interest coverage | 8.60 | 5.47 | 4.34 | 3.19 | 1.45 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,565,000K ÷ $182,000K
= 8.60
Interest coverage measures a company's ability to meet its interest obligations on outstanding debt. A higher interest coverage ratio indicates a greater ability to cover interest expenses.
For Howmet Aerospace Inc, the interest coverage ratio has shown a positive trend over the years. In December 2020, the ratio was 1.45, indicating that the company's operating income was only 1.45 times its interest expense. However, by December 2024, the interest coverage ratio had significantly improved to 8.60, suggesting a substantial increase in the company's ability to meet its interest payment obligations.
This improvement in the interest coverage ratio is a positive sign for Howmet Aerospace Inc as it indicates a stronger financial position and reduced financial risk in terms of debt servicing. The company's improving ability to cover interest expenses over the years bodes well for its financial stability and ability to generate sufficient earnings to meet its debt obligations.
Peer comparison
Dec 31, 2024