Quanex Building Products (NX)
Interest coverage
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 105,182 | 112,322 | 82,624 | 55,545 | -26,311 |
| Interest expense | US$ in thousands | 8,136 | 2,559 | 2,530 | 5,245 | 9,643 |
| Interest coverage | 12.93 | 43.89 | 32.66 | 10.59 | -2.73 |
October 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $105,182K ÷ $8,136K
= 12.93
Quanex Building Products Corp's interest coverage ratio measures the company's ability to meet its interest obligations on outstanding debt. The ratio is calculated by dividing the earnings before interest and taxes (EBIT) by the interest expense. A higher interest coverage ratio indicates that the company is more capable of meeting its interest obligations.
Looking at the trend of Quanex Building Products Corp's interest coverage ratio over the past five years, it is apparent that the ratio has witnessed fluctuations. In 2019, the interest coverage ratio stood at 5.07, indicating that the company's EBIT was 5.07 times its interest expense. This level of coverage signifies a moderate ability to meet interest obligations.
Subsequently, there was a notable improvement in the interest coverage ratio in 2020, reaching 10.71, indicating a significant enhancement in the company's ability to cover its interest payments.
The interest coverage ratio further increased in 2021 to 32.44, signifying a substantial strengthening of the company's ability to meet interest obligations. This improvement continued into 2022, with a notable interest coverage ratio of 43.81, demonstrating a robust ability to cover interest payments.
In 2023, the interest coverage ratio decreased to 14.03, signaling a decrease in the company's ability to cover its interest obligations compared to the previous year. However, despite the decrease, the interest coverage ratio remains at a comfortable level, suggesting that Quanex Building Products Corp still possesses a strong ability to meet its interest payments.
In conclusion, Quanex Building Products Corp's interest coverage ratio has shown fluctuations over the past five years, with occasional peaks and troughs. However, the overall trend indicates a significant improvement in the company's ability to cover its interest obligations, with the ratio mostly reflecting adequate to strong coverage levels.
Peer comparison
Oct 31, 2023