MGP Ingredients Inc (MGPI)
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 | 76,881 | 148,393 | 145,623 | 97,911 | 54,241 |
| Interest expense | US$ in thousands | 8,439 | 6,647 | 5,451 | 4,037 | 1,640 |
| Interest coverage | 9.11 | 22.32 | 26.71 | 24.25 | 33.07 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $76,881K ÷ $8,439K
= 9.11
Based on the data provided, MGP Ingredients Inc's interest coverage has been relatively strong over the past five years. The interest coverage ratio measures a company's ability to meet its interest payment obligations with its operating income.
In December 2020, the interest coverage ratio was 33.07, indicating that the company's operating income was 33.07 times higher than its interest expenses, reflecting a very comfortable position.
In the following years, although there was a slight decline in the interest coverage ratio, with values of 24.25 in 2021, 26.71 in 2022, and 22.32 in 2023, the ratios still suggest that the company was generating significantly more operating income than needed to cover its interest payments.
However, there was a more significant drop in the interest coverage ratio to 9.11 in December 2024, which may warrant further investigation. A lower interest coverage ratio could indicate that the company may have had challenges generating enough income to cover its interest expenses effectively, potentially raising concerns about its financial stability and ability to service its debt obligations.
Overall, MGP Ingredients Inc has historically maintained a strong interest coverage ratio, but the notable decrease in 2024 should be carefully monitored to assess the company's financial health and debt servicing capabilities.