LivaNova PLC (LIVN)
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 | 129,051 | -22,477 | -26,945 | -74,469 | -308,942 |
| Interest expense | US$ in thousands | 21,600 | 58,853 | 48,250 | 50,151 | 40,837 |
| Interest coverage | 5.97 | -0.38 | -0.56 | -1.48 | -7.57 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $129,051K ÷ $21,600K
= 5.97
Interest coverage ratio indicates the company's ability to meet its interest payments on outstanding debt. A higher ratio suggests a stronger ability to cover interest expenses.
In the case of LivaNova PLC:
- In December 2020, the interest coverage ratio was -7.57, indicating that the company's operating income was insufficient to cover its interest expenses, raising concerns about financial stability.
- By December 2021, the ratio improved but remained negative at -1.48, suggesting ongoing challenges in meeting interest obligations.
- The situation improved significantly by December 2024, with a positive interest coverage ratio of 5.97, indicating a healthy ability to cover interest payments from operating income.
Overall, LivaNova PLC experienced a significant improvement in its interest coverage ratio over the years, transitioning from negative to positive territory. This indicates a stronger financial position and a better ability to service its debt through operating income.
Peer comparison
Dec 31, 2024