Newmont Goldcorp Corp (NEM)
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 | 4,962,000 | -1,788,000 | 176,000 | 1,374,000 | 3,434,000 |
| Interest expense | US$ in thousands | 385,000 | 243,000 | 227,000 | 274,000 | 308,000 |
| Interest coverage | 12.89 | -7.36 | 0.78 | 5.01 | 11.15 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $4,962,000K ÷ $385,000K
= 12.89
The interest coverage ratio for Newmont Goldcorp Corp has displayed significant fluctuations over the past five years. On December 31, 2020, the ratio stood at a healthy 11.15, indicating the company's ability to comfortably cover its interest obligations with operating income. However, by the end of 2021, the interest coverage ratio had declined to 5.01, suggesting a decreased capacity to meet interest payments from earnings.
The situation further deteriorated by December 31, 2022, when the interest coverage ratio plummeted to a concerning 0.78. This sharp decline raises flags about the company's ability to cover its interest expenses using its operational earnings.
By December 31, 2023, the interest coverage ratio turned negative, standing at -7.36. This indicates that Newmont Goldcorp Corp faced challenges in generating sufficient earnings to cover its interest obligations, potentially leading to financial strain and solvency concerns.
However, the company demonstrated a strong recovery by December 31, 2024, with an impressive interest coverage ratio of 12.89. This signifies a significant improvement in its ability to pay interest charges from its operating profits, reflecting a positive turnaround in its financial performance.
In conclusion, while Newmont Goldcorp Corp experienced volatile fluctuations in its interest coverage ratio over the analyzed period, the company managed to rebound strongly by the end of 2024, showcasing improved financial stability and effectiveness in servicing its interest payments.