Steel Dynamics Inc (STLD)
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 | 3,278,980 | 5,091,820 | 4,301,100 | 847,142 | 986,880 |
| Interest expense | US$ in thousands | 76,484 | 91,538 | 57,209 | 94,877 | 127,104 |
| Interest coverage | 42.87 | 55.63 | 75.18 | 8.93 | 7.76 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $3,278,980K ÷ $76,484K
= 42.87
The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. A higher ratio indicates a stronger ability to meet interest payments. Looking at the trend for Steel Dynamics Inc.'s interest coverage over the past five years, we can observe a fluctuating pattern.
In 2023, the interest coverage ratio stood at 41.20, a decrease from the previous year's ratio of 55.63. Despite the decline, the ratio remained at a relatively healthy level, signifying that the company's operating income was still significantly higher than its interest expenses.
In 2022, the interest coverage ratio improved significantly to 55.63 compared to 2021's ratio of 75.18. This indicates that the company was more than capable of meeting its interest obligations with its operating income during that period.
The peak in Steel Dynamics Inc.'s interest coverage ratio was observed in 2021 at 75.18, reflecting a robust financial position where the company's operating income far exceeded its interest expenses.
A notable drop occurred in 2020, with the interest coverage ratio falling to 9.13 from 7.76 in 2019. This sharp decline suggests a decrease in the company's ability to cover its interest costs with its operating income during that period.
Overall, Steel Dynamics Inc. has shown variation in its interest coverage ratio over the past five years, with fluctuations that may reflect changes in its operating performance and debt levels. It is important for stakeholders to monitor this ratio to assess the company's ability to meet its interest obligations effectively in the future.
Peer comparison
Dec 31, 2023