Knowles Cor (KN)
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 | 51,800 | 51,100 | -414,800 | 115,800 | 29,200 |
| Interest expense | US$ in thousands | 16,300 | 7,600 | 4,600 | 14,800 | 17,600 |
| Interest coverage | 3.18 | 6.72 | -90.17 | 7.82 | 1.66 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $51,800K ÷ $16,300K
= 3.18
Based on the data provided for Knowles Cor's interest coverage ratio over the five-year period from December 31, 2020, to December 31, 2024, the following observations can be made:
1. In December 31, 2020, the interest coverage ratio was low at 1.66, indicating that Knowles Cor's operating income was only sufficient to cover its interest expenses 1.66 times over.
2. By December 31, 2021, the interest coverage ratio significantly improved to 7.82, signaling a stronger ability to cover interest obligations with operating earnings.
3. However, there was a drastic and concerning decline in the interest coverage ratio to -90.17 by December 31, 2022. A negative interest coverage ratio suggests that the company's operating income was insufficient to cover its interest expenses, raising serious concerns about the company's financial health and its ability to meet debt obligations.
4. The interest coverage ratio rebounded to 6.72 by December 31, 2023, indicating an improvement in the company's ability to service its interest payments.
5. By December 31, 2024, the interest coverage ratio decreased to 3.18, which suggests that the company's operating income may have been less sufficient to cover interest expenses compared to the previous year.
Overall, the trend in Knowles Cor's interest coverage ratio shows significant fluctuations over the years, with a notable dip into negative territory in 2022. It is essential for investors and creditors to monitor this ratio closely to assess the company's ability to meet its debt obligations and manage financial risks effectively.
Peer comparison
Dec 31, 2024