Meta Platforms Inc. (META)
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 | 69,380,000 | 47,874,000 | 28,944,000 | 46,753,000 | 32,671,000 |
| Interest expense | US$ in thousands | 683,000 | 446,000 | 185,000 | 15,000 | 14,000 |
| Interest coverage | 101.58 | 107.34 | 156.45 | 3,116.87 | 2,333.64 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $69,380,000K ÷ $683,000K
= 101.58
The interest coverage ratio measures a company's ability to meet its interest obligations on its outstanding debt. A higher interest coverage ratio indicates a company is more capable of servicing its debt.
For Meta Platforms Inc., the interest coverage ratio has shown a general trend of improvement over the years. As of December 31, 2020, the interest coverage ratio was exceptionally high at 2,333.64, indicating a very strong ability to cover its interest expenses. This high ratio suggests that Meta was generating significant earnings relative to its interest obligations at that time.
Subsequently, the interest coverage ratio continued to increase, reaching 3,116.87 by December 31, 2021. This further improvement indicates that Meta's earnings were even more comfortably covering its interest payments, reflecting a strong financial position and stability.
However, there was a notable decrease in the interest coverage ratio by December 31, 2022, dropping to 156.45. While this ratio is still relatively high, the significant decrease raises concerns about Meta's ability to cover its interest expenses as effectively as in previous years. The decreasing trend continued with a ratio of 107.34 by December 31, 2023, and further declined to 101.58 by December 31, 2024.
Overall, the fluctuations in Meta Platforms Inc.'s interest coverage ratio over the years indicate a mix of robust and slightly weaker financial performance in terms of meeting interest obligations. Investors and stakeholders may want to closely monitor this ratio to assess the company's debt repayment capacity and financial health.
Peer comparison
Dec 31, 2024