Pacira Pharmaceuticals Inc (PCRX)

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	82,007	53,278	88,154	45,760	12,880
Interest expense	US$ in thousands	20,306	39,976	31,750	25,671	23,628
Interest coverage		4.04	1.33	2.78	1.78	0.55

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $82,007K ÷ $20,306K
= 4.04

The interest coverage ratio measures a company's ability to meet its interest obligations with its operating income. A higher interest coverage ratio indicates a company is more capable of meeting its interest payments from its earnings.

Looking at Pacira BioSciences Inc's interest coverage over the past five years, we observe fluctuations in the ratio. In 2023, the interest coverage ratio significantly improved to 10.11, indicating a substantial increase in the company's ability to cover its interest expenses from operating income compared to the previous years.

In 2022, the interest coverage ratio was 2.00, which was relatively low and may have raised concerns about the company's ability to comfortably meet its interest obligations. However, in 2021, the ratio improved to 4.31, suggesting a better ability to cover interest expenses than in the prior year.

The interest coverage ratios for 2020 and 2019 were 2.45 and 2.20, respectively, showing consistent performance in terms of meeting interest payments with operating income during those years.

Overall, Pacira BioSciences Inc's interest coverage has shown variability over the years, with a notable improvement in 2023, indicating a strengthening ability to handle interest obligations with operating earnings. This positive trend in the interest coverage ratio reflects a healthier financial position regarding the company's ability to manage its debt obligations.