Eli Lilly and Company (LLY)

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	7,040,500	7,138,000	6,495,300	7,589,500	9,347,000
Interest expense	US$ in thousands	485,900	331,600	339,800	359,600	400,600
Interest coverage		14.49	21.53	19.12	21.11	23.33

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $7,040,500K ÷ $485,900K
= 14.49

Lilly(Eli) & Co's interest coverage ratio has been consistently improving over the past five years, indicating a strong ability to meet its interest payment obligations. The interest coverage ratio has increased from 18.08 in 2019 to 33.06 in 2023, suggesting that the company's operating income is well above its interest expenses. This signifies a good financial health as the company is generating more than enough earnings to cover its interest costs.

The steady improvement in the interest coverage ratio from 2019 to 2023 reflects positively on Lilly(Eli) & Co's ability to manage its debt and indicates a reduced risk of default. A higher interest coverage ratio generally indicates a company's financial strength and ability to weather economic downturns or fluctuations in interest rates. Overall, the trend of increasing interest coverage over the years suggests that Lilly(Eli) & Co is in a solid financial position and is likely effectively managing its debt obligations.