Ingevity Corp (NGVT)
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 | -437,800 | 83,200 | 331,400 | 214,500 | 282,200 |
| Interest expense | US$ in thousands | 97,800 | 93,300 | 61,800 | 51,700 | 47,100 |
| Interest coverage | -4.48 | 0.89 | 5.36 | 4.15 | 5.99 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $-437,800K ÷ $97,800K
= -4.48
Based on the data provided, Ingevity Corp's interest coverage ratio has fluctuated over the past five years. In 2020, the interest coverage ratio was 5.99, indicating that the company generated nearly six times the operating income needed to cover its interest expenses. However, in 2021, the ratio decreased to 4.15, suggesting a slight decline in the company's ability to cover its interest costs.
The interest coverage ratio improved in 2022 to 5.36, indicating a stronger ability to meet interest obligations compared to the previous year. However, in 2023, there was a significant decline in the interest coverage ratio to 0.89, signaling a potential concern as the company might be facing challenges in generating sufficient operating income to cover its interest expenses.
Moreover, in 2024, the interest coverage ratio turned negative to -4.48, indicating that Ingevity Corp's operating income was insufficient to cover its interest costs, which is a red flag for investors and lenders.
Overall, the trend in Ingevity Corp's interest coverage ratio shows variability and a decline in recent years, raising concerns about the company's financial stability and ability to service its debt obligations. It is crucial for the company to closely monitor and improve its interest coverage ratio to ensure financial health and sustainability in the long term.
Peer comparison
Dec 31, 2024