Louisiana-Pacific Corporation (LPX)
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 | 574,000 | 269,000 | 1,374,000 | 1,794,000 | 637,000 |
| Interest expense | US$ in thousands | 14,000 | 17,000 | 14,000 | 15,000 | 17,000 |
| Interest coverage | 41.00 | 15.82 | 98.14 | 119.60 | 37.47 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $574,000K ÷ $14,000K
= 41.00
Louisiana-Pacific Corporation's interest coverage ratio has exhibited some volatility over the past five years. The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt with its operating income.
In December 2020, the interest coverage ratio was 37.47, indicating that Louisiana-Pacific Corporation generated operating income 37.47 times more than its interest expenses for that period. This signifies strong financial health and indicates that the company had a comfortable buffer to meet its interest obligations.
The interest coverage ratio significantly improved in December 2021 to 119.60, reflecting a substantial increase in operating income relative to interest expenses. This sharp improvement suggests increased profitability and a reduced risk of financial distress due to debt obligations.
In December 2022, the interest coverage ratio remained high at 98.14, indicating continued strong performance in generating operating income compared to interest expenses.
However, there was a notable decline in December 2023, with the interest coverage ratio dropping to 15.82. This suggests a significant decrease in operating income relative to interest expenses, potentially indicating a higher financial risk for the company during that period.
In December 2024, the interest coverage ratio recovered to 41.00, showing an improvement from the previous year but still lower than the levels seen in 2021 and 2022.
Overall, while Louisiana-Pacific Corporation experienced fluctuations in its interest coverage ratio, it demonstrated periods of robust financial performance and solid ability to cover its interest expenses. Investors and creditors should monitor future trends in the interest coverage ratio to assess the company's financial health and ability to manage its debt obligations effectively.
Peer comparison
Dec 31, 2024