Revvity Inc. (RVTY)

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	346,741	300,562	742,699	1,258,460	947,111
Interest expense	US$ in thousands	96,278	98,813	103,955	102,128	49,712
Interest coverage		3.60	3.04	7.14	12.32	19.05

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $346,741K ÷ $96,278K
= 3.60

Interest coverage ratio is an important financial metric that indicates a company's ability to cover its interest expenses with its operating income. In the case of Revvity Inc., the interest coverage ratio has shown a declining trend over the past five years.

As of December 31, 2020, the interest coverage ratio stood at 19.05, indicating that the company was comfortably able to cover its interest payments almost 19 times over. However, this ratio started decreasing in the subsequent years. By December 31, 2021, the interest coverage ratio dropped to 12.32, signaling a slight decline in the company's ability to cover its interest expenses.

The trend continued in the following years as the interest coverage ratio further decreased to 7.14 as of December 31, 2022, 3.04 as of December 31, 2023, and then slightly improved to 3.60 by December 31, 2024. These declining ratios suggest that the company's ability to meet its interest obligations with its operating income has weakened over time.

A declining interest coverage ratio could indicate that the company may be facing challenges in generating enough operating income to cover its interest expenses. It may also raise concerns among investors and creditors about the company's financial health and its ability to service its debt obligations. Management should closely monitor this ratio and take necessary steps to improve the company's financial performance and strengthen its ability to meet its interest payments.