Kaiser Aluminum Corporation (KALU)
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 | 107,200 | 103,200 | 24,600 | 59,500 | 84,400 |
| Interest expense | US$ in thousands | 43,700 | 46,900 | 48,300 | 49,500 | 40,900 |
| Interest coverage | 2.45 | 2.20 | 0.51 | 1.20 | 2.06 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $107,200K ÷ $43,700K
= 2.45
The interest coverage ratio for Kaiser Aluminum Corporation has shown varying trends over the past five years. In 2020, the interest coverage ratio was 2.06, indicating that the company generated enough operating income to cover its interest expenses approximately two times over. However, by the end of 2021, the ratio decreased to 1.20, suggesting a decline in the company's ability to cover its interest obligations.
The year 2022 saw a significant drop in the interest coverage ratio to 0.51, which raises concerns about Kaiser Aluminum's financial health and ability to meet its debt obligations from operating income alone. This sharp decrease may suggest increased financial strain or a decrease in profitability.
Fortunately, there was a notable improvement in 2023, with the interest coverage ratio rising to 2.20, indicating a recovery in the company's ability to cover its interest expenses. By the end of 2024, the ratio further improved to 2.45, signaling a stronger financial position compared to the previous years.
Overall, the fluctuation in Kaiser Aluminum Corporation's interest coverage ratio over the past five years demonstrates the company's varying capacity to meet its interest payments from its operating income, with improvements in recent years following a concerning decline in 2022.
Peer comparison
Dec 31, 2024