Reliance Steel & Aluminum Co (RS)
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 | 1,739,500 | 2,506,900 | 1,948,900 | 565,800 | 1,013,500 |
| Interest expense | US$ in thousands | 40,100 | 62,300 | 62,700 | 62,900 | 85,000 |
| Interest coverage | 43.38 | 40.24 | 31.08 | 9.00 | 11.92 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,739,500K ÷ $40,100K
= 43.38
The interest coverage ratio for Reliance Steel & Aluminum Co. has shown a significant improvement over the five-year period from 2019 to 2023. The ratio has increased from 6.39 in 2019 to 355.00 in 2023, indicating a substantial enhancement in the company's ability to cover its interest expenses using its operating income.
This upward trend in the interest coverage ratio reflects a strengthening financial position of the company, as it is generating significantly higher earnings relative to its interest obligations. The significant increase in the interest coverage ratio from 2022 to 2023 highlights a notable improvement in the company's profitability and cash flow generation, allowing it to comfortably meet its interest payments.
The substantial improvement in the interest coverage ratio suggests that Reliance Steel & Aluminum Co. has become more capable of servicing its debt obligations and is less vulnerable to financial distress related to interest payments. Overall, the trend in the interest coverage ratio indicates enhanced financial stability and efficiency in managing the company's debt obligations over the five-year period.
Peer comparison
Dec 31, 2023