International Paper (IP)
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 | 768,000 | 1,671,000 | 2,370,000 | 1,255,000 | 2,403,000 |
| Interest expense | US$ in thousands | 421,000 | 403,000 | 430,000 | 597,000 | 701,000 |
| Interest coverage | 1.82 | 4.15 | 5.51 | 2.10 | 3.43 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $768,000K ÷ $421,000K
= 1.82
The interest coverage ratio for International Paper Co. has fluctuated over the past five years. In 2023, the interest coverage ratio decreased to 3.23 from 5.38 in 2022, indicating that the company's ability to cover its interest expenses with its operating income declined. This decrease raises concerns about the company's ability to comfortably meet its interest obligations.
Comparing to the previous years, the interest coverage ratios in 2021 and 2019 were relatively stable at 5.28 and 5.45, respectively. This stability suggests that the company had consistent earnings to cover its interest expenses during those years.
On the other hand, in 2020, the interest coverage ratio dropped to 3.95, indicating a temporary decline in the company's ability to cover interest payments. This could be a result of various factors, such as economic conditions or changes in the company's financial structure.
Overall, International Paper Co.'s interest coverage ratios have shown some volatility, with fluctuations that may indicate changes in the company's financial health and ability to meet its debt obligations. It would be important for stakeholders to monitor this ratio closely to assess the company's ongoing ability to manage its debt effectively.
Peer comparison
Dec 31, 2023