Halozyme Therapeutics Inc (HALO)

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	367,091	265,865	256,044	149,680	-60,624
Interest expense	US$ in thousands	18,762	16,947	7,526	20,378	11,627
Interest coverage		19.57	15.69	34.02	7.35	-5.21

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $367,091K ÷ $18,762K
= 19.57

Halozyme Therapeutics Inc.'s interest coverage ratio has displayed fluctuations over the past five years. The company's ability to cover interest expenses has generally been robust, as indicated by consistently positive values. In particular, the interest coverage ratio significantly improved from 2019 to 2021, reaching a peak of 36.66, which suggests a strong capacity to meet interest obligations through operating income.

However, in 2020, the interest coverage ratio dropped to 7.08, indicating a slight decrease in the company's ability to cover interest expenses. This decline may raise some concerns about the company's financial health, as a ratio below 1 indicates an inability to cover interest expenses with operating income alone.

It is worth noting that in 2019, the interest coverage ratio was negative at -5.81, indicating that the company faced challenges in meeting its interest obligations with its operating income during that period. This situation improved significantly in the subsequent years.

Overall, while Halozyme Therapeutics Inc. has shown strong interest coverage ratios in recent years, investors and analysts should continue to monitor this metric closely to ensure the company's ability to fulfill its financial obligations in the long term.