Ironwood Pharmaceuticals Inc (IRWD)

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	-897,120	260,063	231,798	138,339	58,107
Interest expense	US$ in thousands	21,629	7,598	31,150	29,478	36,602
Interest coverage		-41.48	34.23	7.44	4.69	1.59

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $-897,120K ÷ $21,629K
= -41.48

Ironwood Pharmaceuticals Inc's interest coverage has shown fluctuations over the past five years. In 2023, the interest coverage ratio stands at 7.78, which indicates that the company generated 7.78 times more earnings before interest and taxes (EBIT) than the interest expense for that year. This suggests a moderate ability to cover interest expenses from operational income.

The peak in interest coverage was observed in 2022 at 32.95, reflecting a significant increase in the company's ability to cover its interest obligations. This could be attributed to higher EBIT relative to interest expenses during that period.

In 2021 and 2020, the interest coverage ratios were 7.45 and 5.37, respectively, indicating a relatively stable ability to cover interest expenses, although slightly lower than the peak seen in 2022. The ratios still suggest a comfortable coverage of interest payments from operating profits during both years.

The lowest interest coverage ratio in the provided data was in 2019 at 3.20, indicating a lower ability to cover interest expenses with operating income that year. This could raise concerns about the company's financial health and its ability to meet debt obligations.

Overall, while the interest coverage ratios have fluctuated over the years, Ironwood Pharmaceuticals Inc generally maintained a satisfactory ability to cover its interest expenses with operating income, with the exception of the lower ratio observed in 2019.