Keurig Dr Pepper Inc (KDP)

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	2,591,000	3,253,000	2,413,000	3,299,000	2,357,000
Interest expense	US$ in thousands	735,000	496,000	693,000	500,000	604,000
Interest coverage		3.53	6.56	3.48	6.60	3.90

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $2,591,000K ÷ $735,000K
= 3.53

Keurig Dr Pepper Inc's interest coverage ratio has shown fluctuations over the past five years. As of December 31, 2020, the interest coverage ratio was 3.90, indicating that the company's operating income was able to cover its interest expenses approximately 3.9 times.

In the following year, the interest coverage ratio improved significantly to 6.60, signaling a stronger ability to meet its interest obligations with operating income. However, by December 31, 2022, the ratio decreased to 3.48, suggesting a potential strain on the company's ability to cover interest payments.

Subsequently, Keurig Dr Pepper Inc managed to improve its interest coverage ratio to 6.56 by December 31, 2023, indicating a healthier financial position in terms of meeting interest obligations. However, the ratio decreased again to 3.53 by December 31, 2024, potentially signaling a challenge in maintaining consistent coverage of interest expenses.

Overall, the fluctuations in Keurig Dr Pepper Inc's interest coverage ratio over the years highlight the importance of monitoring the company's ability to generate sufficient operating income to cover its interest payments. It is essential for stakeholders to assess the company's financial health and ability to meet debt obligations based on these variations in the interest coverage ratio.