Sensient Technologies Corporation (SXT)

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	191,579	155,023	196,751	170,028	152,656
Interest expense	US$ in thousands	28,781	25,172	14,547	12,544	14,811
Interest coverage		6.66	6.16	13.53	13.55	10.31

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $191,579K ÷ $28,781K
= 6.66

Interest coverage ratio indicates the company's ability to cover its interest expenses with its earnings before interest and taxes (EBIT). Sensient Technologies Corporation's interest coverage ratio has shown a positive trend over the years.

As of December 31, 2020, the interest coverage ratio was 10.31, indicating that the company was able to cover its interest payments 10.31 times with its EBIT for that year. This suggests a strong ability to meet its interest obligations.

The ratio improved in the following years, reaching 13.55 by December 31, 2021, and 13.53 by December 31, 2022. These higher ratios demonstrate a further enhancement in the company's ability to service its debt and indicates a favorable financial position.

However, there was a notable decline in the interest coverage ratio to 6.16 by December 31, 2023, and a slight increase to 6.66 by December 31, 2024. This drop may raise some concerns as it indicates a reduced capacity to cover interest expenses with operating income.

Overall, Sensient Technologies Corporation has generally maintained a strong interest coverage ratio during the period under review, which is a positive indicator of the company's financial health and ability to fulfill its debt obligations.