Harmony Biosciences Holdings (HRMY)

Interest coverage

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	197,153	120,186	87,528	16,986
Interest expense	US$ in thousands	23,757	18,795	24,193	2,412
Interest coverage		8.30	6.39	3.62	7.04

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $197,153K ÷ $23,757K
= 8.30

Harmony Biosciences Holdings Inc's interest coverage ratio has shown a consistent improvement over the past four years. In 2020, the company had a relatively low interest coverage ratio of 0.60, indicating that its ability to cover interest expenses with earnings before interest and taxes (EBIT) was weak. However, this ratio improved significantly in the subsequent years, reaching 3.65 in 2021, 7.67 in 2022, and further increasing to 21.27 in 2023.

The significant increase in the interest coverage ratio suggests that Harmony Biosciences Holdings Inc's ability to meet its interest obligations has strengthened over time. A higher interest coverage ratio indicates that the company is more capable of servicing its debt obligations and that it has a lower risk of default due to insufficient earnings to cover interest expenses.

Overall, the trend of increasing interest coverage ratios demonstrates improved financial stability and a healthier financial position for Harmony Biosciences Holdings Inc. It suggests that the company has been more efficient in generating earnings relative to its interest expenses, which is a positive signal for investors and creditors.