Steel Dynamics Inc (STLD)

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	2,039,230	3,151,180	5,112,610	4,266,280	866,551
Interest expense	US$ in thousands	56,347	76,484	91,538	57,209	94,877
Interest coverage		36.19	41.20	55.85	74.57	9.13

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $2,039,230K ÷ $56,347K
= 36.19

Based on the interest coverage ratios provided for Steel Dynamics Inc, we observe a significant improvement in the company's ability to cover its interest expenses over the years. In December 31, 2020, the interest coverage ratio stood at 9.13, indicating that the company generated earnings more than nine times its interest obligations.

Subsequently, there was a substantial jump in the interest coverage ratio to 74.57 by December 31, 2021, showcasing a robust improvement in the company's financial health and ability to meet its interest payments. This was followed by a slight decrease in the ratio to 55.85 by December 31, 2022, indicating that the company's earnings remained comfortably above its interest expenses.

In the following years, the interest coverage ratios continued to demonstrate healthy levels, with ratios of 41.20 on December 31, 2023, and 36.19 on December 31, 2024. These ratios suggest that Steel Dynamics Inc maintained adequate profitability to cover its interest charges, although at slightly lower levels compared to the peak in 2021.

Overall, the trend in Steel Dynamics Inc's interest coverage ratios reflects a generally positive financial position, with the company exhibiting strong earnings relative to its interest obligations, which is a key indicator of financial stability and solvency.