Bristol-Myers Squibb Company (BMY)
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 | -12,554,000 | 9,591,000 | 8,927,000 | 9,412,000 | -5,471,000 |
| Interest expense | US$ in thousands | 1,947,000 | 1,166,000 | 1,232,000 | 1,334,000 | 1,420,000 |
| Interest coverage | -6.45 | 8.23 | 7.25 | 7.06 | -3.85 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $-12,554,000K ÷ $1,947,000K
= -6.45
The interest coverage ratio reflects Bristol-Myers Squibb Company's ability to meet its interest obligations from its operating income. The trend in the interest coverage over the years indicates the company's ability to cover its interest expenses.
- On December 31, 2020, the interest coverage ratio was -3.85, indicating that the company's operating income was insufficient to cover its interest expenses, which is a cause for concern.
- By the end of December 31, 2021, the interest coverage ratio improved significantly to 7.06, suggesting that the company's operating income was more than sufficient to cover its interest payments, reflecting a positive turnaround from the previous year.
- The trend continued positively through the years, with the interest coverage ratios increasing to 7.25 on December 31, 2022, and further to 8.23 on December 31, 2023. These improvements signify a strengthened ability to meet interest obligations comfortably.
- However, there was a notable dip in the interest coverage ratio to -6.45 on December 31, 2024. This decline raises concerns as it suggests that the operating income may have fallen significantly below the level needed to cover the interest expenses during that period.
Overall, the improving trend in interest coverage ratios from 2020 to 2023 indicates Bristol-Myers Squibb's enhanced capacity to handle its interest payments. Still, the substantial decrease in 2024 warrants close monitoring to understand the reasons behind this negative development and its potential implications on the company's financial health.
Peer comparison
Dec 31, 2024