CVS Health Corp (CVS)
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 | 8,516,000 | 13,807,000 | 7,899,000 | 12,935,000 | 12,655,000 |
| Interest expense | US$ in thousands | 2,958,000 | 2,658,000 | 2,287,000 | 2,503,000 | 2,907,000 |
| Interest coverage | 2.88 | 5.19 | 3.45 | 5.17 | 4.35 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $8,516,000K ÷ $2,958,000K
= 2.88
Interest coverage ratio is an important financial metric used to assess a company's ability to meet its interest obligations on outstanding debt. A higher interest coverage ratio indicates a stronger ability to cover interest expenses.
Based on the provided data, CVS Health Corp's interest coverage ratio has fluctuated over the years:
- As of December 31, 2020, the interest coverage ratio was 4.35, indicating that the company generated operating income 4.35 times higher than its interest expenses.
- By December 31, 2021, the interest coverage ratio improved to 5.17, suggesting an even better ability to cover interest payments.
- However, by December 31, 2022, the interest coverage ratio decreased to 3.45, signaling a slight decline in the company's ability to cover its interest obligations.
- The ratio then rebounded by December 31, 2023, reaching 5.19, indicating a strengthened ability to pay interest charges.
- As of December 31, 2024, the interest coverage ratio dropped to 2.88, reflecting a decrease in the company's ability to cover interest expenses compared to the previous year.
Overall, CVS Health Corp's interest coverage ratio has shown variability over the years, with fluctuations potentially influenced by changes in operating income and interest expenses. Investors and creditors may monitor this ratio closely to assess the company's financial health and its capacity to service its debt obligations.
Peer comparison
Dec 31, 2024