Cognizant Technology Solutions Corp Class A (CTSH)

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	2,892,000	2,835,000	3,039,000	2,839,000	2,120,000
Interest expense	US$ in thousands	54,000	41,000	19,000	9,000	24,000
Interest coverage		53.56	69.15	159.95	315.44	88.33

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $2,892,000K ÷ $54,000K
= 53.56

The interest coverage ratio measures a company's ability to meet its interest expenses with its earnings before interest and taxes (EBIT). A higher ratio indicates a stronger ability to cover interest payments.

From the data provided, Cognizant Technology Solutions Corp Class A has seen fluctuations in its interest coverage over the years. As of December 31, 2020, the company's interest coverage ratio was 88.33, reflecting a healthy ability to service its interest obligations.

By December 31, 2021, the interest coverage ratio improved significantly to 315.44, indicating a substantial increase in the company's ability to cover its interest expenses with its earnings.

However, in the following years, there were fluctuations in Cognizant Technology Solutions Corp Class A's interest coverage. By December 31, 2022, the ratio stood at 159.95, showing a slight decline from the previous year. The ratio further decreased to 69.15 by December 31, 2023, suggesting a potential strain on the company's ability to cover its interest payments.

By December 31, 2024, the interest coverage ratio fell to 53.56, indicating a further decrease in the company's ability to meet its interest expenses with its earnings.

Overall, the trend in Cognizant Technology Solutions Corp Class A's interest coverage ratio shows initial strength, followed by fluctuations and a subsequent decline in its ability to cover interest payments. This trend may raise concerns about the company's financial health and ability to manage its debt obligations effectively.