International Paper (IP)
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 | 577,000 | 767,000 | 1,883,000 | 1,428,000 | 925,000 |
| Interest expense | US$ in thousands | 208,000 | 421,000 | 325,000 | 337,000 | 444,000 |
| Interest coverage | 2.77 | 1.82 | 5.79 | 4.24 | 2.08 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $577,000K ÷ $208,000K
= 2.77
Based on the data provided for International Paper's interest coverage ratio over the years, we observe the following trends:
- In December 31, 2020, the interest coverage ratio was 2.08, indicating that International Paper earned 2.08 times the interest it owed on its outstanding debt during that period.
- By December 31, 2021, the interest coverage ratio improved significantly to 4.24, suggesting stronger financial health and the ability to cover its interest expenses approximately 4.24 times.
- The trend continued to show improvement through December 31, 2022, with the interest coverage ratio further increasing to 5.79, indicating even greater capacity to meet interest obligations from operating profits.
- However, there was a decline in the interest coverage ratio by December 31, 2023, which dropped to 1.82. This signifies a potential strain on International Paper's ability to cover its interest expenses comfortably during that period.
- Subsequently, there was a slight recovery in the interest coverage ratio by December 31, 2024, which rose to 2.77. While an improvement from the previous year, the ratio remains lower than the levels observed in 2022.
In conclusion, the fluctuating trend in International Paper's interest coverage ratio suggests varying degrees of ability to meet interest payments from operating profits over the years. It is important for stakeholders to monitor these ratios closely to assess the company's financial health and debt repayment capacity.
Peer comparison
Dec 31, 2024