Avantor Inc (AVTR)

Interest coverage

		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	714,100	610,700	695,300	755,000	821,700	1,039,800	1,116,900	1,073,200	1,038,200	1,014,100	970,400	852,100	568,900	473,600	369,900	435,400	613,600	507,300
Interest expense (ttm)	US$ in thousands	262,900	275,400	284,800	289,300	284,200	274,700	265,800	256,800	243,600	230,700	217,400	212,400	223,500	264,600	307,600	349,800	382,900	405,900
Interest coverage		2.72	2.22	2.44	2.61	2.89	3.79	4.20	4.18	4.26	4.40	4.46	4.01	2.55	1.79	1.20	1.24	1.60	1.25

June 30, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $714,100K ÷ $262,900K
= 2.72

The interest coverage ratio for Avantor Inc has shown fluctuations over the past several quarters. The ratio indicates the company's ability to meet its interest obligations with its operating income.

From Dec 31, 2020, to Jun 30, 2023, the interest coverage ratio generally remained strong and above 3, indicating a comfortable ability to cover interest expenses. However, there was a significant decline in the ratio in the most recent quarters, with a notable drop from 4.46 in Mar 31, 2022, to 2.72 in Jun 30, 2024.

This decreasing trend may raise concerns about Avantor Inc's ability to cover its interest payments from its operating income. It suggests that the company's profitability or cash flow might have weakened, or its debt levels increased, thus impacting its ability to service its debt effectively.

Overall, a lower interest coverage ratio can indicate increased financial risk for the company, as it may struggle to meet its interest obligations. Investors and creditors may closely monitor this trend to assess Avantor Inc's financial health and ability to manage its debt burden in the future.