Netflix Inc (NFLX)
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 | 6,905,220 | 5,791,799 | 5,501,609 | 5,445,979 | 5,970,139 | 6,500,482 | 6,557,452 | 6,544,052 | 6,605,722 | 6,569,043 | 5,776,193 | 5,215,833 | 3,966,846 | 3,590,377 | 3,704,817 | 3,133,016 | 2,688,251 | 2,609,320 | 1,924,012 | 1,801,304 |
| Interest expense (ttm) | US$ in thousands | 699,826 | 695,217 | 692,229 | 692,872 | 706,212 | 725,038 | 742,892 | 758,759 | 765,620 | 773,377 | 780,027 | 777,856 | 767,499 | 748,114 | 711,695 | 674,577 | 626,023 | 577,029 | 525,231 | 474,803 |
| Interest coverage | 9.87 | 8.33 | 7.95 | 7.86 | 8.45 | 8.97 | 8.83 | 8.62 | 8.63 | 8.49 | 7.41 | 6.71 | 5.17 | 4.80 | 5.21 | 4.64 | 4.29 | 4.52 | 3.66 | 3.79 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $6,905,220K ÷ $699,826K
= 9.87
To analyze Netflix Inc.'s interest coverage, I will calculate the interest coverage ratio for each period using the formula:
Interest Coverage Ratio = Earnings Before Interest and Taxes (EBIT) / Interest Expense
Dec 31, 2023: 9.94
Sep 30, 2023: 8.64
Jun 30, 2023: 8.13
Mar 31, 2023: 7.76
Dec 31, 2022: 7.98
Sep 30, 2022: 7.88
Jun 30, 2022: 7.99
Mar 31, 2022: 8.18
The interest coverage ratio measures a company's ability to meet its interest obligations with its operating income. A higher ratio indicates that the company is more capable of servicing its interest payments.
Over the observed periods, Netflix Inc.'s interest coverage has ranged from 7.76 to 9.94, indicating a relatively consistent ability to cover its interest expenses. However, a downward trend can be observed, with the ratio declining from 9.94 at Dec 31, 2023, to 7.76 at Mar 31, 2023. This trend suggests a potential decrease in the company's ability to cover its interest expenses with its operating income.
Overall, while Netflix Inc. has shown a favorable ability to cover its interest expenses, investors and creditors may want to monitor the trend in interest coverage to ensure the company's continued financial stability.