International Business Machines (IBM)
Interest coverage
| Dec 31, 2024 | Sep 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 9,033,000 | 7,591,000 | 10,402,000 | 10,285,000 | 9,585,000 | 3,122,000 | 2,643,000 | 2,230,000 | 1,805,000 | 7,189,000 | 6,950,000 | 7,020,000 | 5,179,000 | 6,132,000 | 6,318,000 | 5,518,000 | 7,994,000 | 7,798,000 | 9,020,000 | 10,835,000 |
| Interest expense (ttm) | US$ in thousands | 1,690,000 | 1,678,000 | 1,672,000 | 1,607,000 | 1,515,000 | 1,398,000 | 1,272,000 | 1,216,000 | 1,206,000 | 1,201,000 | 1,185,000 | 1,154,000 | 1,168,000 | 1,201,000 | 1,243,000 | 1,289,000 | 1,326,000 | 1,435,000 | 1,460,000 | 1,344,000 |
| Interest coverage | 5.34 | 4.52 | 6.22 | 6.40 | 6.33 | 2.23 | 2.08 | 1.83 | 1.50 | 5.99 | 5.86 | 6.08 | 4.43 | 5.11 | 5.08 | 4.28 | 6.03 | 5.43 | 6.18 | 8.06 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $9,033,000K ÷ $1,690,000K
= 5.34
The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt. A higher ratio indicates the company is more capable of servicing its interest obligations.
Analyzing IBM's interest coverage ratio from December 31, 2019, to December 31, 2024, we observe fluctuations in the ratio. The ratio started at 8.06 in December 2019, indicating a strong ability to cover interest payments. However, it declined to 4.28 by December 2020, suggesting a weakening ability to cover interest expenses.
Subsequently, the ratio showed some improvement, reaching 6.08 by December 2021. However, it fluctuated throughout 2022 and early 2023, dropping to as low as 1.50 in September 2022. This signifies a potential strain on IBM's ability to cover interest costs during that period.
The ratio recovered in the following quarters, climbing back up to 6.40 by December 2023, and remained relatively stable around 6.00 in the subsequent periods. Overall, despite some fluctuations, IBM maintained a moderate to strong interest coverage ratio during the analyzed period, indicating a reasonable ability to meet its interest payment obligations.
Peer comparison
Dec 31, 2024
See also:
International Business Machines Interest Coverage (Quarterly Data)