MGM Resorts International (MGM)

Interest coverage

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	1,760,312	2,106,566	1,244,814	3,386,272	2,765,120	2,421,691	4,831,336	2,680,347	2,307,381	1,577,909	-692,368	-2,005,458	-547,916	2,586,344	3,195,095	4,436,802	3,529,420	1,044,201	1,240,604	1,298,616
Interest expense (ttm)	US$ in thousands	460,293	490,547	504,549	529,163	594,954	659,299	734,176	800,389	799,593	786,795	760,554	714,538	676,380	688,181	729,876	788,949	847,932	861,990	852,060	817,724
Interest coverage		3.82	4.29	2.47	6.40	4.65	3.67	6.58	3.35	2.89	2.01	-0.91	-2.81	-0.81	3.76	4.38	5.62	4.16	1.21	1.46	1.59

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,760,312K ÷ $460,293K
= 3.82

Interest coverage is a financial ratio that indicates a company's ability to pay interest expenses on its outstanding debt. It is calculated by dividing earnings before interest and taxes (EBIT) by interest expenses.

Analyzing MGM Resorts International's interest coverage over the past eight quarters, we observe fluctuations in the ratio. In Q4 2023, the interest coverage ratio improved significantly to 3.30, indicating that the company's EBIT was 3.3 times greater than its interest expenses for that quarter. This is a positive sign as it suggests that MGM Resorts International generated sufficient earnings to comfortably cover its interest obligations.

However, in Q2 and Q1 of 2023, the interest coverage ratios were notably negative at -2.79 and -3.21, respectively. A negative interest coverage ratio implies that the company's earnings were insufficient to cover its interest expenses, raising concerns about its financial health and ability to meet debt obligations. These low or negative ratios in the first half of 2023 may indicate financial stress or operational challenges faced by the company during that period.

Overall, while there have been fluctuations in MGM Resorts International's interest coverage ratios over the past eight quarters, the recent improvement in Q4 2023 is a positive sign. It is essential for investors and stakeholders to closely monitor these ratios to assess the company's ability to manage its debt and ensure financial stability in the long term.