Materion Corporation (MTRN)
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 | 47,223 | 136,444 | 119,755 | 77,111 | 8,215 |
| Interest expense | US$ in thousands | 37,751 | 35,126 | 23,833 | 6,286 | 4,910 |
| Interest coverage | 1.25 | 3.88 | 5.02 | 12.27 | 1.67 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $47,223K ÷ $37,751K
= 1.25
Interest coverage is a key financial ratio that indicates a company's ability to meet its interest obligations on outstanding debt. A higher interest coverage ratio implies that the company is more capable of servicing its debt.
Looking at the data for Materion Corporation's interest coverage ratio over the past five years, we see fluctuations in the ratio:
- In December 2020, the interest coverage ratio was 1.67, indicating that the company barely earned enough operating income to cover its interest expenses.
- By December 2021, the interest coverage ratio improved significantly to 12.27, which suggests a strong ability to meet interest payments.
- In December 2022, the interest coverage ratio decreased to 5.02, but still indicates a healthy coverage of interest obligations.
- The ratio further declined to 3.88 by December 2023, signaling a slight weakening in the company's ability to cover its interest expenses.
- By December 2024, the interest coverage ratio fell notably to 1.25, indicating a potential strain on the company's ability to meet its interest obligations.
Overall, Materion Corporation's interest coverage ratio has shown variability in recent years, with periods of strong coverage followed by potential challenges in meeting interest payments. It would be important for the company to closely monitor and manage its debt levels and operating performance to ensure sufficient coverage of its interest expenses in the future.