Innoviva Inc (INVA)

Interest coverage

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	59,597	213,255	302,738	426,206	303,164
Interest expense	US$ in thousands	22,209	19,157	15,789	19,070	18,331
Interest coverage		2.68	11.13	19.17	22.35	16.54

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $59,597K ÷ $22,209K
= 2.68

The interest coverage ratio measures a company's ability to meet its interest payment obligations with its operating income. A higher ratio indicates a stronger ability to cover interest payments.

Based on the data provided for Innoviva Inc:
- As of December 31, 2020, the interest coverage ratio was 16.54, indicating the company's operating income was 16.54 times its interest expense.
- By December 31, 2021, the interest coverage ratio improved to 22.35, reflecting an even stronger ability to cover interest payments.
- As of December 31, 2022, the ratio slightly decreased to 19.17 but still remained at a healthy level.
- However, by December 31, 2023, the interest coverage ratio dropped to 11.13, suggesting a decrease in the company's ability to cover interest expenses effectively.
- The ratio significantly fell to 2.68 as of December 31, 2024, signaling a notable decline in the company's ability to meet its interest payment obligations from its operating income.

In summary, Innoviva Inc demonstrated a favorable interest coverage ratio for the years 2020, 2021, and 2022, but experienced a decline in 2023 and a significant decrease by 2024. It is essential for the company to monitor and manage its interest coverage ratio to ensure its financial health and capacity to handle debt obligations effectively.