Paramount Skydance Corporation Class B Common Stock (PSKY)

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	-5,317,000	-333,000	2,197,000	-9,351,000	4,178,000
Interest expense	US$ in thousands	860,000	920,000	931,000	986,000	1,031,000
Interest coverage		-6.18	-0.36	2.36	-9.48	4.05

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $-5,317,000K ÷ $860,000K
= -6.18

The analysis of Paramount Skydance Corporation Class B Common Stock's interest coverage ratios over the period from December 31, 2020, to December 31, 2024, reveals significant variability and a generally concerning trend in the company's ability to meet its interest obligations.

In 2020, the interest coverage ratio stood at 4.05, indicating that the company's earnings before interest and taxes (EBIT) were more than four times its interest expenses. This suggests a relatively comfortable position in covering interest payments at that time. However, by the end of 2021, the ratio deteriorated dramatically to -9.48, reflecting substantial negative earnings or EBIT, which signifies an inability to generate sufficient operating income to cover interest obligations, compounded by the negative sign suggesting interest expense exceeds earnings.

In 2022, there was some improvement, with the ratio increasing to 2.36. Although this remains below the ideal level of at least 3 to 4 times coverage, it indicates that the company's earnings again provided some degree of coverage for interest expenses. Nonetheless, the trend reversed sharply in 2023, with the ratio falling to -0.36, indicating a loss position that severely undermines the company's capacity to meet its interest obligations, now with interest expenses surpassing earnings.

The negative trajectory continued into 2024, with the ratio decreasing further to -6.18. This sustained negative interest coverage underscores ongoing financial difficulties, as the company continues to incur losses that are significantly inadequate for covering interest expenses.

Overall, the interest coverage ratios depict a volatile and deteriorating financial profile. The initial positive coverage in 2020 was followed by substantial deficits in subsequent years, with negative ratios reliably indicating periods where the company faced challenges in meeting interest obligations. The progression suggests worsening profitability or increasing interest burdens, raising concerns about the company's short-term liquidity and long-term solvency.