PPG Industries Inc (PPG)
Interest coverage
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 2,093,000 | 1,997,000 | 1,813,000 | 1,964,000 | 1,528,000 |
| Interest expense | US$ in thousands | 241,000 | 247,000 | 167,000 | 121,000 | 138,000 |
| Interest coverage | 8.68 | 8.09 | 10.86 | 16.23 | 11.07 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $2,093,000K ÷ $241,000K
= 8.68
The interest coverage ratio is a key financial metric that indicates a company's ability to meet its interest obligations from its operating income. Looking at the trend in PPG Industries Inc's interest coverage ratio from 2020 to 2024, we observe fluctuations in the company's ability to cover its interest expenses.
In 2020, the interest coverage ratio was 11.07, indicating that PPG Industries Inc generated operating income 11.07 times greater than its interest expenses. This suggests a healthy level of interest coverage.
By the end of 2021, the interest coverage ratio improved to 16.23, signaling an even stronger ability to cover interest payments. This could be attributed to increased profitability or a reduction in interest expenses.
However, in 2022, there was a decrease in the interest coverage ratio to 10.86, indicating a slight weakening in the company's ability to cover interest charges. This decrease may raise concerns about the company's ability to service its debt obligations.
The trend continued in 2023 with a further decline in the interest coverage ratio to 8.09. A ratio below 1 suggests that the company's operating income may not be sufficient to cover its interest expenses, potentially indicating financial distress.
In 2024, there was a slight improvement in the interest coverage ratio to 8.68, but it still remains below the ratios observed in earlier years. This improvement may indicate some alleviation of the financial pressure faced by the company but still raises some concerns about its ability to service its debt effectively.
Overall, the fluctuations in PPG Industries Inc's interest coverage ratio over the years indicate varying levels of financial health and highlight the importance of monitoring this ratio to assess the company's ability to meet its interest obligations.
Peer comparison
Dec 31, 2024