Kirby Corporation (KEX)

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	453,193	334,883	169,476	-278,806	-412,612
Interest expense	US$ in thousands	49,129	52,008	44,588	42,469	48,739
Interest coverage		9.22	6.44	3.80	-6.56	-8.47

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $453,193K ÷ $49,129K
= 9.22

The interest coverage ratio reflects Kirby Corporation's ability to pay its interest expenses from its operating income. Looking at the data provided, the interest coverage ratio has shown a concerning trend over the years. In 2020 and 2021, the ratio was in the negative range (-8.47 and -6.56 respectively), indicating that Kirby Corporation's operating income was insufficient to cover its interest expenses during those years.

However, there seems to be an improvement in the company's financial health as the interest coverage ratio turned positive in the subsequent years. The ratio increased from 3.80 in 2022 to 9.22 in 2024. This indicates that Kirby Corporation's operating income has strengthened, allowing the company to cover its interest expenses more comfortably.

Overall, the trend from negative interest coverage to positive coverage reflects an improvement in Kirby Corporation's financial position. It suggests that the company has managed to enhance its profitability and generate sufficient operating income to meet its interest obligations in the later years. However, it would be prudent for Kirby Corporation to continue monitoring and maintaining a healthy interest coverage ratio to ensure sustainable financial stability.