Sonoco Products Company (SON)
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 | 760,923 | 686,608 | -88,916 | 335,539 | 451,899 |
| Interest expense | US$ in thousands | 136,686 | 101,662 | 63,991 | 75,046 | 66,845 |
| Interest coverage | 5.57 | 6.75 | -1.39 | 4.47 | 6.76 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $760,923K ÷ $136,686K
= 5.57
The interest coverage ratio for Sonoco Products Co. has been relatively stable over the past five years, ranging from 5.58 to 8.69. This ratio indicates the company's ability to meet its interest obligations with its earnings before interest and taxes (EBIT). A higher interest coverage ratio suggests that the company is more capable of servicing its debt and is at lower risk of default.
In 2023, the interest coverage ratio decreased to 5.58 from 7.69 in 2022, which may raise some concerns about the company's ability to cover its interest expenses. However, it is important to note that a ratio above 2 is generally considered healthy, and Sonoco Products Co. has consistently maintained ratios well above that benchmark.
Overall, Sonoco Products Co. appears to have a solid interest coverage position, with the ability to comfortably cover its interest payments using its earnings. It's essential for investors and stakeholders to continue monitoring this ratio to ensure ongoing financial stability and debt management effectiveness.
Peer comparison
Dec 31, 2023