Owens & Minor Inc (OMI)
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 | 103,189 | 139,782 | 324,844 | 135,103 | 29,607 |
| Interest expense | US$ in thousands | 157,915 | 128,891 | 48,090 | 83,398 | 98,113 |
| Interest coverage | 0.65 | 1.08 | 6.75 | 1.62 | 0.30 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $103,189K ÷ $157,915K
= 0.65
The interest coverage ratio measures a company's ability to meet its interest obligations with its earnings before interest and taxes (EBIT). A higher ratio indicates stronger financial health and a lower risk of default on interest payments.
In the case of Owens & Minor, Inc., the interest coverage ratio has fluctuated over the past five years. In 2021, the ratio was significantly high at 8.37, indicating a strong ability to cover its interest expenses with operating income. This could suggest a lower financial risk and better stability.
However, in 2023, the interest coverage ratio decreased to 1.29, raising concerns about the company's ability to meet its interest obligations from its earnings. A ratio below 2 typically raises red flags as it suggests that the company may struggle to cover its interest payments with its current earnings.
It is important for Owens & Minor, Inc. to closely monitor its interest coverage ratio and take necessary steps to improve it, such as increasing profitability, reducing interest expenses, or refinancing debts at lower interest rates to strengthen its financial position and mitigate potential risks of default.
Peer comparison
Dec 31, 2023