Sylvamo Corp (SLVM)
Interest coverage
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 433,000 | 329,000 | 464,000 |
| Interest expense | US$ in thousands | 64,000 | 80,000 | 32,000 |
| Interest coverage | 6.77 | 4.11 | 14.50 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $433,000K ÷ $64,000K
= 6.77
The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt. This ratio is calculated by dividing the earnings before interest and taxes (EBIT) by the interest expense.
For Sylvamo Corp, the interest coverage ratio has been showing a declining trend over the past two years. In 2023, the interest coverage ratio stands at 5.61, which indicates that the company's EBIT covers its interest expenses approximately 5.61 times. This is a decrease from the ratio of 7.77 in 2022, suggesting a potential strain on the company's ability to meet its interest obligations from operating earnings.
However, it's worth noting that the data for 2021 and 2020 are not available, which limits the ability to provide a complete trend analysis. Without this information, it is difficult to determine the trajectory of Sylvamo Corp's interest coverage over a longer period.
In conclusion, the declining trend in Sylvamo Corp's interest coverage ratio raises some concerns about the company's ability to comfortably meet its interest payments from operating earnings in recent years. Further analysis would be needed to assess the company's overall financial health and its ability to manage its debt obligations effectively.
Peer comparison
Dec 31, 2023