Keurig Dr Pepper Inc (KDP)
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 | 3,253,000 | 2,413,000 | 3,299,000 | 2,357,000 | 2,348,000 |
| Interest expense | US$ in thousands | 496,000 | 693,000 | 500,000 | 604,000 | 654,000 |
| Interest coverage | 6.56 | 3.48 | 6.60 | 3.90 | 3.59 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $3,253,000K ÷ $496,000K
= 6.56
The interest coverage ratio indicates Keurig Dr Pepper Inc's ability to meet its interest payment obligations. It is calculated by dividing earnings before interest and taxes (EBIT) by the interest expenses.
From 2019 to 2023, Keurig Dr Pepper Inc's interest coverage ratio has generally improved, indicating a stronger ability to cover interest expenses with operating profits. In 2019, the interest coverage ratio was 3.64, meaning the company generated 3.64 times the amount of EBIT to cover its interest expenses. This ratio increased steadily over the years, reaching 6.44 in 2023.
The consistent improvement in the interest coverage ratio reflects the company's increasing profitability and cash generation, which has enhanced its ability to service its debt obligations. A higher interest coverage ratio is generally preferred by lenders and investors as it signifies lower default risk and a healthier financial position.
Overall, the trend of the interest coverage ratio for Keurig Dr Pepper Inc shows a positive financial performance and indicates efficient management of interest expenses relative to its operating earnings.
Peer comparison
Dec 31, 2023