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.