Kenvue Inc. (KVUE)
Interest coverage
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 1,841,000 | 1,811,000 | 1,842,000 | 2,380,000 | 2,440,000 |
| Interest expense (ttm) | US$ in thousands | 431,000 | 419,000 | 411,000 | 358,000 | 250,000 |
| Interest coverage | 4.27 | 4.32 | 4.48 | 6.65 | 9.76 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,841,000K ÷ $431,000K
= 4.27
Interest coverage ratio measures the company's ability to cover its interest expenses with its operating income. For Kenvue Inc., the interest coverage ratio has been gradually decreasing over the past year.
As of December 31, 2023, the interest coverage ratio was 9.76, indicating that the company was comfortably able to cover its interest expenses almost 10 times with its operating income. However, by December 31, 2024, the ratio had declined to 4.27, suggesting a decrease in the company's ability to cover its interest costs.
The declining trend in the interest coverage ratio raises concerns about Kenvue Inc.'s financial health and ability to meet its interest obligations. It may indicate increasing financial risk and a potential strain on the company's cash flow to meet its debt servicing requirements in the future. Management should closely monitor this trend and take appropriate measures to improve the company's financial position and ensure adequate coverage of its interest expenses.
Peer comparison
Dec 31, 2024