Avanos Medical Inc (AVNS)

Interest coverage

		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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	-43,400	-21,100	-10,500	72,900	78,400	71,400	57,200	32,600	10,600	-63,500	-67,000	-62,000	-47,300	-2,400	-19,300	-25,500	-49,000	-52,200	-26,200	26,600
Interest expense (ttm)	US$ in thousands	15,000	14,700	13,000	12,200	10,000	7,700	5,600	3,800	3,300	5,300	8,700	12,100	15,600	17,200	16,400	15,600	15,000	14,200	14,900	21,300
Interest coverage		-2.89	-1.44	-0.81	5.98	7.84	9.27	10.21	8.58	3.21	-11.98	-7.70	-5.12	-3.03	-0.14	-1.18	-1.63	-3.27	-3.68	-1.76	1.25

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-43,400K ÷ $15,000K
= -2.89

Interest coverage ratio measures a company's ability to meet its interest obligations through its operating income. A higher interest coverage ratio indicates that a company is more capable of servicing its debt.

For Avanos Medical Inc, the interest coverage ratio has fluctuated over the past eight quarters. In Q4 2023, the ratio stood at 1.45, indicating that the company's operating income was sufficient to cover its interest expenses 1.45 times. This ratio has declined from the previous quarter, where it was 3.33, and is also significantly lower compared to the ratios in earlier quarters.

The trend suggests a potential decrease in the company's ability to meet its interest obligations with its current level of operating income. It is essential for stakeholders to monitor this ratio closely to assess Avanos Medical Inc's financial health and its capacity to service its debt in the future. A declining interest coverage ratio may raise concerns about the company's ability to manage its debt effectively.