MGM Resorts International (MGM)

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	1,760,310	2,765,120	2,307,380	-547,916	3,529,420
Interest expense	US$ in thousands	460,293	594,954	799,593	676,380	847,932
Interest coverage		3.82	4.65	2.89	-0.81	4.16

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $1,760,310K ÷ $460,293K
= 3.82

The interest coverage ratio for MGM Resorts International has been fluctuating over the past five years. In 2023, the interest coverage ratio improved significantly to 3.30, indicating that the company's operating income was able to cover its interest expense 3.30 times. This improvement is a positive sign as it shows the company's ability to meet its interest obligations with its earnings.

In contrast, in 2022 and 2020, the interest coverage ratios were negative, indicating that the company's operating income was insufficient to cover its interest expenses during those years. This raises concerns about the company's financial health and ability to service its debt obligations.

In 2021 and 2019, the interest coverage ratios were 0.81 and 1.81, respectively, indicating that the company's operating income was just able to cover its interest expenses during those periods. While an interest coverage ratio above 1 suggests that the company can meet its interest payments, having a ratio closer to or below 1 may be a cause for caution as it implies a finer margin of safety.

Overall, MGM Resorts International's interest coverage ratio has shown variability, and investors and stakeholders should closely monitor this ratio to assess the company's ability to manage its debt and interest obligations.