Cytokinetics Inc (CYTK)

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	-497,938	-369,586	-198,874	-111,327	-115,069
Interest expense	US$ in thousands	28,306	19,414	16,440	15,963	6,623
Interest coverage		-17.59	-19.04	-12.10	-6.97	-17.37

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $-497,938K ÷ $28,306K
= -17.59

Based on the data provided, Cytokinetics Inc's interest coverage ratio has been consistently negative over the past five years. This indicates that the company's operating income was insufficient to cover its interest expenses during each of these years. The declining trend in the interest coverage ratio suggests a worsening ability of the company to meet its interest obligations from its operating earnings.

Having an interest coverage ratio consistently below 1 (in this case, significantly negative) raises concerns about the company's financial health and its ability to service its debt obligations. A negative interest coverage ratio implies that the company is not generating enough operating income to cover its interest expenses, which could indicate financial distress and potential insolvency risk.

It is crucial for potential investors, creditors, and other stakeholders to closely monitor Cytokinetics Inc's financial performance and debt management practices, as the negative trend in interest coverage ratio signifies a significant risk to the company's solvency and financial stability. Further analysis of the company's operations, profitability, and debt repayment capacity is recommended to assess its long-term viability and sustainability.