Sonoco Products Company (SON)
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 | 236,106 | 751,518 | 789,887 | -96,991 | 330,638 |
| Interest expense | US$ in thousands | 172,620 | 136,686 | 97,041 | 59,235 | 72,070 |
| Interest coverage | 1.37 | 5.50 | 8.14 | -1.64 | 4.59 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $236,106K ÷ $172,620K
= 1.37
The interest coverage ratio of Sonoco Products Company has shown fluctuations over the years. In December 31, 2020, the interest coverage ratio was 4.59, indicating that the company earned 4.59 times its interest expenses. However, by December 31, 2021, the ratio turned negative to -1.64, suggesting that the company's operating income was insufficient to cover its interest payments.
Subsequently, there was a significant improvement in the interest coverage ratio to 8.14 in December 31, 2022, demonstrating a strong ability to meet interest obligations. This positive trend continued in December 31, 2023, with a ratio of 5.50.
However, there was a decline in the interest coverage ratio to 1.37 by December 31, 2024, indicating a potential strain on the company's ability to cover its interest expenses with its operating income. It is essential for Sonoco Products Company to closely monitor its interest coverage ratio and ensure that it maintains a healthy ratio to meet its debt obligations effectively.
Peer comparison
Dec 31, 2024