Jazz Pharmaceuticals PLC (JAZZ)

Interest coverage

		Dec 31, 2024	Sep 30, 2024	Jun 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
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	749,278	767,027	679,209	637,402	719,765	629,155	604,865	608,223	581,802	823,016	703,283	474,880	475,907	337,090	514,928	788,202	435,130	286,821	265,492	269,465
Interest expense (ttm)	US$ in thousands	238,097	276,502	289,297	300,744	308,775	293,239	301,986	291,705	288,242	302,715	315,843	322,074	278,766	217,741	151,797	108,587	99,707	90,378	80,811	72,835
Interest coverage		3.15	2.77	2.35	2.12	2.33	2.15	2.00	2.09	2.02	2.72	2.23	1.47	1.71	1.55	3.39	7.26	4.36	3.17	3.29	3.70

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $749,278K ÷ $238,097K
= 3.15

Interest coverage ratio measures the company's ability to meet its interest obligations using its operating income. A higher ratio indicates that the company is more capable of servicing its debt.

Analyzing Jazz Pharmaceuticals PLC's interest coverage ratio from March 31, 2020, to December 31, 2024, we observe fluctuations in the ratio over time.

- The ratio started at 3.70 on March 31, 2020, and increased to a peak of 7.26 on March 31, 2021, indicating a significant improvement in the company's ability to cover interest expenses during that period.

- However, from September 30, 2021, to December 31, 2024, the interest coverage ratio decreased steadily, reaching its lowest point of 1.47 on March 31, 2022.

- Even though there were fluctuations over the years, generally, Jazz Pharmaceuticals PLC managed to maintain their interest coverage above 1, indicating that they were able to meet their interest obligations using their operating income.

It is worth noting that a lower interest coverage ratio may signal potential financial risk and could indicate a need for the company to closely monitor and manage its debt levels to ensure they remain sustainable.