Take-Two Interactive Software Inc (TTWO)

Interest coverage

		Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	-3,590,600	-1,579,900	-1,623,300	-1,332,100	-1,165,200	-333,900	-6,900	265,700	473,600	600,533	622,490	717,757	629,400	495,451	496,227	455,680	425,267	361,444	236,390	187,556
Interest expense (ttm)	US$ in thousands	132,000	126,600	125,000	122,600	96,700	67,305	37,805	8,905	1,332	1,027	1,027	1,027	8,218	16,301	16,383	24,437	26,644	19,282	19,256	11,230
Interest coverage		-27.20	-12.48	-12.99	-10.87	-12.05	-4.96	-0.18	29.84	355.56	584.74	606.12	698.89	76.59	30.39	30.29	18.65	15.96	18.75	12.28	16.70

March 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-3,590,600K ÷ $132,000K
= -27.20

The interest coverage ratio of Take-Two Interactive Software Inc has experienced significant fluctuations over the past few quarters. The ratio is calculated by dividing earnings before interest and taxes (EBIT) by interest expenses, indicating the company's ability to cover its interest payments with its operating income.

From March 2019 to September 2021, the interest coverage ratio ranged from 12.28 to 698.89, showing a relatively healthy ability to cover interest expenses with operating income. However, there was a sharp decline in the ratio in the following quarters, reaching negative values, indicating that the company's operating income was not enough to cover its interest payments during those periods.

The negative values for interest coverage from December 2021 to March 2024 raise concerns about the company's financial health. A negative interest coverage ratio implies that the company's operating income is insufficient to cover its interest expenses, indicating a high financial risk. This may result in potential cash flow issues and difficulties in meeting debt obligations in the long run.

Overall, the declining trend in interest coverage and the presence of negative values suggest that Take-Two Interactive Software Inc may be facing financial challenges that require attention. It is essential for the company to improve its operational performance and manage its debt levels effectively to enhance its financial stability and future sustainability.