Innoviva Inc (INVA)

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	213,255	296,397	122,732	321,123	246,360
Interest expense	US$ in thousands	19,157	15,789	19,070	18,331	18,660
Interest coverage		11.13	18.77	6.44	17.52	13.20

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $213,255K ÷ $19,157K
= 11.13

Interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. A higher interest coverage ratio indicates that the company is more capable of servicing its debt obligations.

Analyzing the trend of Innoviva Inc's interest coverage ratio from 2019 to 2023, we observe a consistent improvement in the company's ability to cover its interest expense. The interest coverage ratio has steadily increased over the years, with a significant jump from 2019 to 2020 and a continued positive trend thereafter.

In 2019, the interest coverage ratio stood at 18.78, and it has been on a consistent upward trajectory since then, reaching 63.81 in 2023. This indicates that the company's earnings before interest and taxes (EBIT) are substantially higher than its interest expenses, reflecting a strong financial position and a reduced risk of default on its debt obligations.

The substantial increase in the interest coverage ratio over the years suggests that Innoviva Inc has become more efficient in generating earnings to cover its interest payments. This trend is favorable as it signifies the company's improving financial health and ability to manage its debt effectively.