Planet Fitness Inc (PLNT)
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 | 324,198 | 283,401 | 238,545 | 129,644 | 67,813 |
| Interest expense | US$ in thousands | 5,362 | 86,576 | 88,628 | 81,211 | 82,117 |
| Interest coverage | 60.46 | 3.27 | 2.69 | 1.60 | 0.83 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $324,198K ÷ $5,362K
= 60.46
Planet Fitness Inc's interest coverage has shown a positive trend over the past few years. Starting at a relatively low level of 0.83 in December 2020, the company's ability to cover its interest payments has improved significantly, reaching 1.60 in December 2021, 2.69 in December 2022, and further strengthening to 3.27 in December 2023. This indicates that the company's earnings before interest and taxes (EBIT) are now more than sufficient to cover its interest expenses.
The most significant improvement in interest coverage occurred in December 2024, with a substantial ratio of 60.46. This exceptionally high interest coverage ratio suggests that Planet Fitness Inc has significantly reduced its financial risk and has a strong capacity to meet its interest obligations. A ratio of this magnitude indicates that the company's earnings are significantly higher than its interest expenses, highlighting a very healthy financial position.
Overall, the upward trend in Planet Fitness Inc's interest coverage ratios demonstrates a positive financial performance and a strengthened ability to meet its debt obligations, indicating a favorable outlook for the company's financial health and stability.