Cognizant Technology Solutions Corp Class A (CTSH)
Interest coverage
| Dec 31, 2024 | Sep 30, 2024 | 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 | 2,994,000 | 3,007,000 | 2,968,000 | 2,824,000 | 2,835,000 | 2,793,000 | 2,884,000 | 3,051,000 | 3,039,000 | 3,057,000 | 2,973,000 | 2,907,000 | 2,839,000 | 2,570,000 | 2,466,000 | 2,272,000 | 2,120,000 | 2,224,000 | 2,258,000 | 2,436,000 |
| Interest expense (ttm) | US$ in thousands | 54,000 | 46,000 | 43,000 | 43,000 | 41,000 | 38,000 | 33,000 | 26,000 | 19,000 | 13,000 | 10,000 | 9,000 | 9,000 | 10,000 | 13,000 | 20,000 | 24,000 | 27,000 | 28,000 | 25,000 |
| Interest coverage | 55.44 | 65.37 | 69.02 | 65.67 | 69.15 | 73.50 | 87.39 | 117.35 | 159.95 | 235.15 | 297.30 | 323.00 | 315.44 | 257.00 | 189.69 | 113.60 | 88.33 | 82.37 | 80.64 | 97.44 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $2,994,000K ÷ $54,000K
= 55.44
Interest coverage ratio is a measure of a company's ability to cover its interest expenses with its operating income. A higher interest coverage ratio indicates that the company is more capable of meeting its interest obligations.
For Cognizant Technology Solutions Corp Class A, the interest coverage ratio has fluctuated over the years. From March 31, 2020, to March 31, 2022, the ratio increased steadily, reaching a peak of 323.00. This indicates a strong ability to cover interest payments with operating income during this period.
However, starting from June 30, 2022, the interest coverage ratio began to decline, dropping to 55.44 by December 31, 2024. This significant decrease raises concerns about the company's ability to comfortably cover its interest expenses with its operating income.
Overall, while Cognizant Technology Solutions Corp Class A had a strong interest coverage ratio in the past, the declining trend in recent periods suggests a potential strain on the company's ability to meet its interest obligations from its operating income. Investors and analysts may want to closely monitor this trend to assess the company's financial health and risk profile.
Peer comparison
Dec 31, 2024