Solventum Corp. (SOLV)
Interest coverage
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | ||
|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 899,000 | 1,249,000 | 1,368,000 | 1,541,000 | 1,525,000 | 1,557,000 | 1,587,000 | 1,612,500 | 1,690,000 |
| Interest expense (ttm) | US$ in thousands | 367,000 | 260,000 | 153,000 | 39,000 | 0 | 0 | 0 | 0 | 0 |
| Interest coverage | 2.45 | 4.80 | 8.94 | 39.51 | — | — | — | — | — |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $899,000K ÷ $367,000K
= 2.45
The interest coverage ratio for Solventum Corp. provides insights into the company's ability to cover its interest expenses with its operating income. Looking at the data provided, we observe that the interest coverage ratio was not available for the periods up to September 30, 2024, indicated by the notation "—".
However, significant changes are seen in the interest coverage ratio in the later periods. The interest coverage ratio for Solventum Corp. has decreased substantially from 39.51 on March 31, 2024, to 2.45 on December 31, 2024. This sharp decline suggests a potential strain on the company's ability to cover its interest expenses with its operating income as the ratio has decreased significantly.
A lower interest coverage ratio indicates that the company may have difficulty meeting its interest obligations from its earnings, potentially signaling financial risk. Solventum Corp. should closely monitor this metric and consider strategies to improve its interest coverage in order to ensure financial stability and viability in the long term.
Peer comparison
Dec 31, 2024