Quest Diagnostics Incorporated (DGX)
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 | 1,265,000 | 1,358,000 | 2,744,000 | 2,057,000 | 1,285,000 |
| Interest expense | US$ in thousands | 163,000 | 148,000 | 152,000 | 166,000 | 180,000 |
| Interest coverage | 7.76 | 9.18 | 18.05 | 12.39 | 7.14 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,265,000K ÷ $163,000K
= 7.76
Quest Diagnostics, Inc.'s interest coverage has fluctuated over the past five years. The interest coverage ratio indicates the company's ability to meet its interest obligations from its operating income.
In 2023, the interest coverage ratio decreased to 8.74 from 10.75 in 2022. This decline suggests that Quest Diagnostics may have faced some challenges in generating enough operating income to cover its interest expenses during the year. However, with a ratio above 1, the company still earned enough to cover its interest payments.
Comparing 2023 to 2021, where the interest coverage was 16.28, indicates a significant drop. This could imply that Quest Diagnostics might have taken on more debt or had lower operating income in 2023 compared to 2021.
Despite the decrease in 2023, when compared to 2020 and 2019 with interest coverage ratios of 12.55 and 7.36 respectively, the company's ability to cover interest expenses remains relatively strong. It is important for stakeholders to monitor the trend of the interest coverage ratio over time to assess the company's financial health and ability to meet its debt obligations.
Peer comparison
Dec 31, 2023