Alkermes Plc (ALKS)
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 | 437,585 | 299,811 | 248,422 | 374,488 | 281,151 | 239,318 | 122,135 | -154,183 | -154,264 | -134,713 | -94,995 | -56,052 | -28,087 | -70,496 | -42,395 | -74,093 | -87,878 | -47,462 | -101,941 | -115,171 |
| Interest expense (ttm) | US$ in thousands | 22,578 | 23,984 | 23,990 | 23,722 | 23,032 | 21,747 | 19,293 | 15,978 | 13,040 | 10,676 | 9,561 | 9,599 | 11,219 | 10,683 | 10,057 | 9,772 | 8,659 | 9,986 | 11,560 | 12,958 |
| Interest coverage | 19.38 | 12.50 | 10.36 | 15.79 | 12.21 | 11.00 | 6.33 | -9.65 | -11.83 | -12.62 | -9.94 | -5.84 | -2.50 | -6.60 | -4.22 | -7.58 | -10.15 | -4.75 | -8.82 | -8.89 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $437,585K ÷ $22,578K
= 19.38
The interest coverage ratio is a financial metric used to evaluate a company's ability to pay its interest expenses with its operating income. A higher interest coverage ratio indicates better financial health and a lower risk of default.
Based on the provided data for Alkermes Plc, the interest coverage ratio for the period from March 31, 2020, to December 31, 2024, fluctuated significantly. The interest coverage ratio started at a negative level in March 2020 (-8.89) and continued to remain negative up to June 2023, indicating that the company was not generating enough operating income to cover its interest expenses during that time.
From June 2023 onwards, the interest coverage ratio turned positive, reaching the highest point of 19.38 in December 31, 2024. This positive trend suggests that Alkermes Plc's operating income was sufficient to cover its interest payments and even had excess earnings to cover the interest expenses comfortably. This improvement in the interest coverage ratio is a positive sign as it indicates a stronger financial position and reduced financial risk for the company.
In conclusion, the interest coverage ratio for Alkermes Plc showed a significant improvement over the analyzed period, starting from negative levels and eventually reaching a healthy positive level by the end of December 2024. This trend reflects the company's ability to generate enough income to cover its interest obligations and signifies an enhancement in its financial stability.
Peer comparison
Dec 31, 2024