Marriot Vacations Worldwide (VAC)
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 | 468,000 | 587,000 | -2,940,000 | -2,867,000 | -2,727,000 |
| Interest expense | US$ in thousands | 162,000 | 145,000 | 118,000 | 164,000 | 150,000 |
| Interest coverage | 2.89 | 4.05 | -24.92 | -17.48 | -18.18 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $468,000K ÷ $162,000K
= 2.89
The interest coverage ratio for Marriott Vacations Worldwide shows a declining trend from December 31, 2020, to December 31, 2022, with negative values indicating that the company's earnings before interest and taxes (EBIT) are insufficient to cover its interest expenses. This indicates a potential risk as the company may struggle to meet its interest obligations.
However, there is a significant improvement in the interest coverage ratio for December 31, 2023, and December 31, 2024, indicating a positive turnaround. A ratio of 4.05 and 2.89 respectively suggests that the company's earnings are now more comfortably covering its interest payments.
Overall, the fluctuation in the interest coverage ratio over the years indicates that Marriott Vacations Worldwide has experienced challenges in managing its interest expenses, but recent improvements show signs of financial recovery and a more sustainable position in meeting its interest obligations.