Light & Wonder Inc (LNW)
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 | 714,000 | 497,000 | 4,015,000 | 531,000 | -69,000 |
| Interest expense | US$ in thousands | 293,000 | 309,000 | 327,000 | 478,000 | 503,000 |
| Interest coverage | 2.44 | 1.61 | 12.28 | 1.11 | -0.14 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $714,000K ÷ $293,000K
= 2.44
The interest coverage ratio measures a company's ability to pay interest on its outstanding debt. A ratio below 1 indicates that the company is not generating enough operating income to cover its interest expenses.
Light & Wonder Inc's interest coverage ratio has shown significant fluctuations over the five-year period provided. As of December 31, 2020, the ratio was -0.14, implying that the company's operating income was insufficient to cover its interest expenses, raising concerns about its financial health.
However, there was a considerable improvement in the interest coverage ratio in the following years. By December 31, 2022, the ratio had increased substantially to 12.28, indicating a strong ability to cover interest obligations with operating income. This significant improvement suggests that the company may have enhanced its profitability and operational efficiency.
Subsequently, the ratios for December 31, 2023, and December 31, 2024 were 1.61 and 2.44, respectively. While these ratios are above 1, indicating that the company is capable of meeting its interest payments, they are relatively lower compared to the peak in 2022.
In conclusion, the trend in Light & Wonder Inc's interest coverage ratio has been volatile, with a notable improvement in 2022 but a slight decline in the following years. It is essential for stakeholders to monitor this ratio closely to assess the company's ability to service its debt obligations and manage financial risks effectively.
Peer comparison
Dec 31, 2024