Boston Scientific Corp (BSX)
Interest coverage
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 2,343,000 | 1,649,000 | 1,199,000 | -80,000 | 1,518,000 |
| Interest expense | US$ in thousands | 265,000 | 470,000 | 341,000 | 361,000 | 473,000 |
| Interest coverage | 8.84 | 3.51 | 3.52 | -0.22 | 3.21 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $2,343,000K ÷ $265,000K
= 8.84
Interest coverage ratio indicates the company's ability to meet its interest obligations from its operating income. A higher interest coverage ratio is generally considered favorable as it suggests that the company is more capable of servicing its debt.
From the data provided, we observe that Boston Scientific Corp.'s interest coverage ratio has fluctuated over the past five years. In 2020, the ratio was relatively low at 1.91, indicating that the company's operating income was only sufficient to cover its interest expenses about 1.91 times. However, there has been a positive trend in the subsequent years, with the interest coverage ratio improving to 3.93 in 2019, 5.41 in 2021, and further to 9.95 in 2023.
The significant increase in the interest coverage ratio from 2020 to 2023 reflects an improvement in Boston Scientific Corp.'s ability to meet its interest obligations comfortably. This indicates a stronger financial position and reduced risk of default on its debt. Investors and creditors generally view a higher interest coverage ratio favorably as it implies lower financial risk and greater stability in the company's operations.
Overall, the trend of increasing interest coverage ratio over the years suggests that Boston Scientific Corp. has been effectively managing its debt and generating sufficient operating income to cover its interest expenses.
Peer comparison
Dec 31, 2023