Westlake Chemical Corporation (WLK)
Interest coverage
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 963,000 | 370,000 | 585,000 | 539,000 | 822,000 | 1,681,000 | 1,815,000 | 2,583,000 | 3,073,000 | 3,615,000 | 3,947,000 | 3,486,000 | 2,798,000 | 2,104,000 | 1,322,000 | 642,000 | 430,000 | 345,000 | 505,000 | 655,000 |
| Interest expense (ttm) | US$ in thousands | 159,000 | 161,000 | 162,000 | 163,000 | 165,000 | 167,000 | 171,000 | 173,000 | 177,000 | 180,000 | 197,000 | 189,000 | 176,000 | 164,000 | 140,000 | 144,000 | 142,000 | 143,000 | 137,000 | 125,000 |
| Interest coverage | 6.06 | 2.30 | 3.61 | 3.31 | 4.98 | 10.07 | 10.61 | 14.93 | 17.36 | 20.08 | 20.04 | 18.44 | 15.90 | 12.83 | 9.44 | 4.46 | 3.03 | 2.41 | 3.69 | 5.24 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $963,000K ÷ $159,000K
= 6.06
The interest coverage ratio measures a company's ability to meet its interest payment obligations. A higher ratio indicates greater financial health and a lower risk of default.
Analyzing the interest coverage data of Westlake Chemical Corporation from March 2020 to December 2024, we observe fluctuating values. The ratio was at a healthy 5.24 in March 2020 but decreased to 3.69 in June 2020, indicating a slight weakening of the company's ability to cover its interest expenses.
The ratio further declined to 2.41 in September 2020, suggesting a potential strain on earnings relative to interest payments. However, there was a slight improvement to 3.03 in December 2020. The trend reversed positively from March 2021 onwards, with the interest coverage ratio steadily increasing.
Notably, from June 2022 to September 2024, the interest coverage ratio consistently remained above 10, indicating a strong ability to meet interest obligations. This culminated in a peak ratio of 20.08 in September 2022, signifying robust financial performance.
However, a decline in the ratio was observed in the subsequent periods, dropping to 4.98 in December 2023 and further to 3.31 in March 2024. The ratio slightly rebounded to 3.61 in June 2024 but dropped significantly to 2.30 in September 2024.
Overall, while the interest coverage ratio of Westlake Chemical Corporation exhibited fluctuations over the analyzed period, the company demonstrated both strengths and weaknesses in its ability to cover interest payments. Monitoring this ratio is crucial for assessing the company's financial health and its capacity to manage debt expenses effectively.
Peer comparison
Dec 31, 2024