ODP Corp (ODP)
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 | 220,000 | 246,000 | -136,000 | -252,000 | 239,000 |
| Interest expense | US$ in thousands | 20,000 | 16,000 | 28,000 | 42,000 | 89,000 |
| Interest coverage | 11.00 | 15.38 | -4.86 | -6.00 | 2.69 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $220,000K ÷ $20,000K
= 11.00
Analysis of ODP Corp's interest coverage ratio indicates the company's ability to meet its interest obligations through its operating income. The trend shows fluctuations over the years. In 2023, the interest coverage ratio improved to 11.00, reflecting a stronger ability to cover interest payments. This is a positive sign as it suggests that the company's operating income is more than sufficient to cover its interest expenses.
In 2022, the interest coverage ratio was 15.38, indicating an even stronger ability to cover interest payments compared to 2023. However, in 2021 and 2020, the company experienced negative interest coverage ratios of -4.86 and -6.00 respectively, indicating that the operating income was insufficient to cover interest expenses during those years. This is a cause for concern as it suggests potential financial distress.
The interest coverage ratio improved in 2019 to 2.69, indicating a better ability to cover interest expenses compared to 2021 and 2020, but still lower than the coverage ratios in 2022 and 2023. Overall, the trend in ODP Corp's interest coverage ratio shows fluctuations, with the company facing challenges in covering its interest payments in some years. It is essential for investors and stakeholders to monitor this ratio closely to assess the company's financial health and ability to meet its debt obligations.
Peer comparison
Dec 31, 2023