Knife River Corporation (KNF)
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 | 326,236 | 303,286 | 193,012 | 189,922 | 212,834 |
| Interest expense | US$ in thousands | 55,242 | 58,096 | 61,061 | 19,218 | 20,577 |
| Interest coverage | 5.91 | 5.22 | 3.16 | 9.88 | 10.34 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $326,236K ÷ $55,242K
= 5.91
Interest coverage, a key financial ratio that reflects a company's ability to meet its interest obligations, has shown variability for Knife River Corporation over the past five years. In 2020, the interest coverage ratio was 10.34, indicating that the company generated sufficient earnings to cover its interest expense 10.34 times. The ratio slightly decreased to 9.88 in 2021, still demonstrating strong coverage.
However, in 2022, there was a significant decrease in the interest coverage ratio to 3.16, suggesting a lower ability to cover interest payments with operating earnings. The ratio improved in 2023 to 5.22 and further to 5.91 in 2024, but it is still notably below the levels seen in 2020 and 2021.
The declining trend in interest coverage from 2020 to 2022 raises concerns about Knife River Corporation's earnings capacity to meet its interest obligations during this period. It is essential for the company to closely monitor and improve its interest coverage ratio to ensure financial stability and avoid potential liquidity issues in the future.
Peer comparison
Dec 31, 2024