Expedia Group Inc. (EXPE)

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	1,372,000	824,000	310,000	-2,675,000	941,000
Interest expense	US$ in thousands	245,000	277,000	351,000	360,000	173,000
Interest coverage		5.60	2.97	0.88	-7.43	5.44

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $1,372,000K ÷ $245,000K
= 5.60

Expedia Group Inc's interest coverage ratio has shown significant fluctuations over the past five years. In 2023, the interest coverage ratio improved to 38.82, indicating that the company's ability to cover its interest expenses with operating income has strengthened substantially compared to the previous year. This is a positive sign as a higher interest coverage ratio suggests that Expedia Group is more capable of meeting its interest obligations.

The sharp increase in the interest coverage ratio from 2022 to 2023 could be attributed to enhanced operating performance, increased earnings, or possibly a decrease in interest expenses. However, it is important to note that in 2022, the interest coverage ratio was only 3.78, signifying a moderate ability to cover interest expenses.

In 2021, the interest coverage ratio improved slightly to 0.68, but it remained relatively low, indicating that the company's operating income was barely sufficient to cover its interest expenses. The negative interest coverage ratio of -4.84 in 2020 is concerning, as it implies that Expedia Group's operating income was insufficient to cover its interest charges during that period.

The positive trend in the interest coverage ratio from 2020 to 2023 suggests an improvement in Expedia Group's financial health and ability to service its debt obligations. Monitoring the interest coverage ratio over time is crucial for assessing the company's financial stability and its ability to manage its debt effectively.