Olin Corporation (OLN)
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 | 740,400 | 1,819,900 | 1,886,700 | -727,300 | 206,300 |
| Interest expense | US$ in thousands | 181,100 | 143,900 | 348,000 | 292,700 | 243,200 |
| Interest coverage | 4.09 | 12.65 | 5.42 | -2.48 | 0.85 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $740,400K ÷ $181,100K
= 4.09
Interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt. A higher ratio indicates a stronger ability to cover interest payments from operating income.
Looking at Olin Corp.'s interest coverage over the past five years, the trend shows variability in the company's ability to cover interest expenses. In 2023, the interest coverage ratio was 4.29, indicating that the company generated operating income 4.29 times higher than its interest expenses. This demonstrates a moderate ability to cover interest payments.
In contrast, the interest coverage ratio was exceptionally high in 2022 at 12.62, signaling a robust capability to meet interest obligations. The ratio dropped to 5.40 in 2021, still reflecting a healthy ability to cover interest costs.
However, in 2020, the interest coverage ratio was negative at -0.13, indicating that operating income was insufficient to cover interest expenses. This is a concerning sign as it suggests a potential financial strain on the company.
The trend continued in 2019 with an interest coverage ratio of 1.05, showing a minimal ability to cover interest payments. Overall, Olin Corp.'s interest coverage has shown fluctuations, with periods of strong coverage followed by instances of weakness. Further analysis into the drivers of these fluctuations would be necessary to understand the company's financial health and ability to service its debt obligations.
Peer comparison
Dec 31, 2023