Laboratory Corporation of America Holdings (LH)
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 | 1,166,700 | 806,100 | 1,761,400 | 3,336,500 | 2,425,600 |
| Interest expense | US$ in thousands | 208,300 | 199,600 | 179,800 | 212,100 | 207,400 |
| Interest coverage | 5.60 | 4.04 | 9.80 | 15.73 | 11.70 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,166,700K ÷ $208,300K
= 5.60
Interest coverage is a key financial ratio that indicates a company's ability to meet its interest obligations on outstanding debt using its earnings before interest and taxes (EBIT). Looking at the data provided for Laboratory Corporation of America Holdings, we observe the following trend:
1. In December 2020, the interest coverage ratio was 11.70, indicating that the company generated 11.70 times more earnings before interest and taxes (EBIT) compared to its interest expenses for that period.
2. By December 2021, the interest coverage ratio improved to 15.73, reflecting a stronger ability to cover interest payments with EBIT.
3. However, in December 2022, the interest coverage ratio decreased to 9.80, suggesting a slight decline in the company's ability to cover interest costs with its operating earnings.
4. The trend continued to show a decrease in December 2023, with the interest coverage ratio dropping significantly to 4.04, indicating a potential strain on the company's ability to cover interest expenses with its earnings.
5. In the latest period, December 2024, the interest coverage ratio improved slightly to 5.60, but it remains lower compared to the levels observed in the previous years.
Overall, while the company has generally exhibited a strong ability to cover its interest obligations with operating earnings, there are fluctuations in the interest coverage ratio over the years, with a notable decline in 2023. This trend suggests the importance of monitoring the company's financial performance and interest coverage ratio to ensure it maintains a healthy balance between earnings and interest expenses.
Peer comparison
Dec 31, 2024