Take-Two Interactive Software Inc (TTWO)

Interest coverage

		Mar 31, 2025	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	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
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	-4,422,900	-3,249,600	-3,250,100	-3,033,400	-3,049,400	-1,117,900	-1,162,000	-1,328,700	-1,162,600	-335,258	3,317	279,264	489,708	617,544	587,881	642,677	540,299	406,855	459,619	466,950
Interest expense (ttm)	US$ in thousands	74,700	74,700	64,600	69,800	80,100	102,700	116,500	135,900	130,700	108,405	80,105	29,605	1,332	9,245	9,245	9,245	16,436	10,855	10,937	18,991
Interest coverage		-59.21	-43.50	-50.31	-43.46	-38.07	-10.89	-9.97	-9.78	-8.90	-3.09	0.04	9.43	367.65	66.80	63.59	69.52	32.87	37.48	42.02	24.59

March 31, 2025 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-4,422,900K ÷ $74,700K
= -59.21

Take-Two Interactive Software Inc's interest coverage ratio has been fluctuating over the years. The interest coverage ratio measures the company's ability to pay its interest expenses on outstanding debt. From June 30, 2020, to June 30, 2022, the company's interest coverage ratio was quite healthy, ranging from 24.59 to 9.43. However, starting from September 30, 2022, the interest coverage ratio dropped significantly and became negative, indicating that the company's operating income was not sufficient to cover its interest expenses.

The negative interest coverage ratios from September 30, 2022, to March 31, 2025, suggest that Take-Two Interactive Software Inc was facing challenges in meeting its interest obligations with its current level of operating income. A negative interest coverage ratio is a red flag for investors and creditors as it indicates financial distress and the potential risk of default on debt payments.

The declining trend in the interest coverage ratio over the years may raise concerns about the company's financial stability and ability to manage its debt effectively. It will be crucial for the company to focus on improving its operating performance and addressing its debt levels to ensure long-term financial sustainability.