Quaker Chemical Corporation (KWR)
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 | 194,706 | 219,032 | 41,573 | 178,634 | 60,965 |
| Interest expense | US$ in thousands | 43,223 | 50,699 | 32,579 | 22,326 | 26,603 |
| Interest coverage | 4.50 | 4.32 | 1.28 | 8.00 | 2.29 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $194,706K ÷ $43,223K
= 4.50
Interest coverage ratio is an important financial metric that indicates a company's ability to meet its interest obligations from its operating earnings. A higher interest coverage ratio is generally considered favorable as it suggests that the company is more capable of servicing its debt.
Analyzing the interest coverage ratio of Quaker Chemical Corporation over the years, we can observe fluctuations in the company's ability to cover its interest expenses.
- As of December 31, 2020, the interest coverage ratio was 2.29, indicating that the company earned 2.29 times the amount needed to cover its interest expenses. This suggests a moderate ability to meet interest obligations from operating earnings.
- By December 31, 2021, the interest coverage ratio improved significantly to 8.00, reflecting a stronger ability to cover interest expenses. This substantial improvement indicates an enhanced capacity to service debt obligations.
- However, on December 31, 2022, the interest coverage ratio decreased to 1.28, indicating a decline in the company's ability to cover interest payments from operating earnings. This lower ratio raises concerns about the company's financial health and its ability to service its debt effectively.
- The interest coverage ratio improved again by December 31, 2023, reaching 4.32. This indicates a better ability to cover interest expenses compared to the previous year, but the ratio is still lower than in 2021.
- Finally, on December 31, 2024, the interest coverage ratio stood at 4.50, showing a slight improvement compared to the previous year. While the ratio has increased, it is still lower than the peak in 2021.
Overall, Quaker Chemical Corporation's interest coverage ratio has shown variability over the years, with significant improvements followed by declines. It is essential for investors and stakeholders to closely monitor this ratio to assess the company's ability to meet its interest obligations and manage debt effectively.
Peer comparison
Dec 31, 2024