International Flavors & Fragrances Inc (IFF)
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 | -2,110,000 | -1,326,000 | 585,000 | 566,000 | 665,000 |
| Interest expense | US$ in thousands | 380,000 | 336,000 | 289,000 | 132,000 | 138,000 |
| Interest coverage | -5.55 | -3.95 | 2.02 | 4.29 | 4.82 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $-2,110,000K ÷ $380,000K
= -5.55
The interest coverage ratio measures a company's ability to meet its interest obligations from its operating income. A higher interest coverage ratio indicates a company is more capable of servicing its debt through its operating earnings.
In the case of International Flavors & Fragrances Inc., we observe a declining trend in the interest coverage ratio over the past five years. In 2019, the ratio was at its highest at 5.05, indicating strong coverage of interest expenses by operating income. However, this ratio has been decreasing steadily over the subsequent years, reaching 1.54 in 2023.
The decreasing trend in the interest coverage ratio could be a cause for concern, suggesting that the company's ability to cover its interest expenses with operating income has weakened over time. A lower interest coverage ratio may indicate potential problems with debt repayment and financial risk.
It is crucial for investors and creditors to closely monitor this trend in International Flavors & Fragrances Inc.'s interest coverage ratio to assess the company's financial health and ability to manage its debt obligations effectively. Further analysis of the company's financial statements and debt structure is recommended to gain a comprehensive understanding of its financial position.
Peer comparison
Dec 31, 2023