Baxter International Inc (BAX)

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	-122,000	415,000	-2,229,000	1,629,000	1,713,000
Interest expense	US$ in thousands	408,000	512,000	395,000	192,000	134,000
Interest coverage		-0.30	0.81	-5.64	8.48	12.78

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $-122,000K ÷ $408,000K
= -0.30

Interest coverage measures a company's ability to meet its interest payments on outstanding debt. A higher interest coverage ratio indicates a stronger ability to cover interest expenses.

For Baxter International Inc, the interest coverage ratio has fluctuated over the years:

1. As of December 31, 2020, the interest coverage ratio was 12.78, indicating that Baxter had a comfortable cushion to cover its interest expenses.

2. By December 31, 2021, the ratio decreased to 8.48, suggesting a slight decline in the company's ability to cover interest payments, but still at a relatively healthy level.

3. However, a significant decline was observed by December 31, 2022, with a negative interest coverage ratio of -5.64. This indicates that Baxter's operating income was not sufficient to cover its interest expenses, raising concerns about the company's financial health.

4. A modest recovery was seen by December 31, 2023, with an interest coverage ratio of 0.81, showing some improvement but still indicating a challenging financial position.

5. Unfortunately, by December 31, 2024, the interest coverage ratio further decreased to -0.30, indicating a continued struggle for Baxter in meeting its interest obligations.

Overall, Baxter International Inc's interest coverage ratio has shown fluctuations, with a significant decline in recent years, raising concerns about its ability to service its debt. Further analysis and monitoring of the company's financial performance and debt management practices are recommended to address these challenges.