Owens Corning Inc (OC)
Interest coverage
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 1,673,000 | 1,723,000 | 1,440,000 | -122,000 | 722,000 |
| Interest expense | US$ in thousands | 76,000 | 109,000 | 126,000 | 132,000 | 131,000 |
| Interest coverage | 22.01 | 15.81 | 11.43 | -0.92 | 5.51 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,673,000K ÷ $76,000K
= 22.01
Owens Corning's interest coverage ratio has shown a consistent improvement over the past five years. The interest coverage ratio measures the company's ability to meet its interest payments on debt obligations, with a higher ratio indicating a greater capacity to do so.
In 2020, the interest coverage ratio was 6.55, which increased to 10.87 in 2021, and further improved to 15.66 in 2022. However, the most significant leap was seen in 2023, with the interest coverage ratio reaching 22.79. This indicates that Owens Corning's earnings before interest and taxes (EBIT) are substantially higher than the interest expenses, providing a comfortable buffer to meet its interest obligations.
Overall, the trend of increasing interest coverage ratios reflects positively on Owens Corning's financial health and ability to service its debt. Investors and creditors may view this trend favorably as it signifies improved financial stability and a reduced risk of default due to insufficient earnings to cover interest payments.