IQVIA Holdings Inc (IQV)

Interest coverage

		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	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	2,131,000	1,986,000	1,912,000	1,786,000	1,767,000	1,831,000	1,735,000	1,631,000	1,504,000	1,321,000	1,154,000	917,000	767,000	676,000	648,000	750,000	754,000	766,000	747,000	757,000
Interest expense (ttm)	US$ in thousands	672,000	619,000	546,000	471,000	416,000	378,000	362,000	362,000	375,000	387,000	395,000	409,000	416,000	423,000	437,000	443,000	447,000	444,000	435,000	428,000
Interest coverage		3.17	3.21	3.50	3.79	4.25	4.84	4.79	4.51	4.01	3.41	2.92	2.24	1.84	1.60	1.48	1.69	1.69	1.73	1.72	1.77

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $2,131,000K ÷ $672,000K
= 3.17

Interest coverage ratio is a measure of a company's ability to meet its interest obligations on outstanding debt. It is calculated by dividing earnings before interest and taxes (EBIT) by the interest expense.

Analyzing the interest coverage ratios of IQVIA Holdings Inc over the past eight quarters, we observe a downward trend. The interest coverage ratios have decreased steadily from 5.13 in Q3 2022 to 3.24 in Q4 2023. This indicates that the company's ability to cover its interest expenses with its earnings has declined over the period.

While an interest coverage ratio above 1 indicates that a company is generating enough earnings to cover its interest payments, it is generally preferred to have a higher ratio to ensure financial stability and flexibility. IQVIA's interest coverage ratios have consistently been above 1, indicating that the company has been able to meet its interest obligations.

However, the decreasing trend in the interest coverage ratio may raise concerns about the company's ability to comfortably cover its interest expenses in the future, especially if earnings decline or interest expenses increase. It is essential for investors and stakeholders to monitor this ratio closely to assess IQVIA's financial health and ability to service its debt obligations.