Hexcel Corporation (HXL)

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	215,300	175,200	51,800	12,500	428,900
Interest expense	US$ in thousands	34,000	36,200	38,300	41,800	45,500
Interest coverage		6.33	4.84	1.35	0.30	9.43

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $215,300K ÷ $34,000K
= 6.33

The interest coverage ratio measures a company's ability to meet its interest obligations on outstanding debt with its earnings before interest and taxes (EBIT). Hexcel Corp.'s interest coverage ratio has fluctuated over the past five years, indicating varying levels of financial health.

In 2023, the interest coverage ratio was 6.57, showing that the company generated 6.57 times more EBIT than the interest expenses incurred during the year. This indicates a healthy ability to cover interest payments.

Comparing this to the previous year, the interest coverage ratio was 5.06 in 2022, reflecting a slight improvement from 2021 when it was 1.83. The significant increase from 2021 to 2022 indicates a stronger ability to cover interest expenses.

However, in 2021 and 2020, the interest coverage ratios were relatively low at 1.83 and 1.68, respectively, suggesting that Hexcel Corp. had a lower capacity to cover interest costs during those years. This could be a concern as it indicates a higher risk of default on debt obligations.

The interest coverage ratio was notably high in 2019 at 9.43, reflecting a robust ability to cover interest expenses with earnings. Overall, Hexcel Corp.'s interest coverage ratio has shown variability over the years, with improvements in recent years, indicating a strengthening financial position in terms of meeting interest obligations.