Kaiser Aluminum Corporation (KALU)
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 | 103,200 | 10,400 | 25,500 | 79,700 | 105,000 |
| Interest expense | US$ in thousands | 46,900 | 48,300 | 49,500 | 40,900 | 24,600 |
| Interest coverage | 2.20 | 0.22 | 0.52 | 1.95 | 4.27 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $103,200K ÷ $46,900K
= 2.20
The interest coverage ratio measures a company's ability to meet its interest obligations on outstanding debt. A higher ratio indicates that the company is more capable of servicing its debt with its earnings.
Analyzing Kaiser Aluminum Corp's interest coverage over the past five years, we observe fluctuations in the ratio. In 2023, the interest coverage ratio improved significantly to 2.23 from 0.57 in 2022. This suggests that the company's earnings were more than double its interest expenses in 2023, indicating a healthier financial position regarding debt obligations.
However, in 2022, the interest coverage was relatively low at 0.57, indicating that the company's earnings were insufficient to cover its interest expenses. This could potentially raise concerns about the company's ability to meet its interest obligations without sufficient earnings.
In 2021 and 2020, the interest coverage ratios were 1.29 and 2.18 respectively, showing a moderate ability to cover interest expenses with earnings. The significant decrease in 2021 compared to 2020 might indicate a tighter financial position or increased interest expenses relative to earnings.
Notably, in 2019, Kaiser Aluminum Corp had a relatively high interest coverage ratio of 6.29, indicating a strong ability to cover interest payments with earnings.
Overall, the trend in interest coverage ratios for Kaiser Aluminum Corp shows variability year over year, with 2023 showing a notable improvement. It's essential for investors and stakeholders to closely monitor these ratios to assess the company's financial health and its ability to manage its debt obligations effectively.
Peer comparison
Dec 31, 2023