Marriot Vacations Worldwide (VAC)
Interest coverage
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 411,000 | 586,000 | 124,000 | -358,000 | 222,000 |
| Interest expense | US$ in thousands | 11,000 | 4,000 | 1,000 | 1,000 | 1,000 |
| Interest coverage | 37.36 | 146.50 | 124.00 | -358.00 | 222.00 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $411,000K ÷ $11,000K
= 37.36
Marriott Vacations Worldwide Corp's interest coverage ratio has fluctuated over the past five years. The ratio was at its lowest in 2020 at 0.85, indicating that the company's operating income was only able to cover 85% of its interest expenses for that year. This could suggest financial distress or inefficiency in managing its debt obligations.
However, the interest coverage ratio improved significantly in 2022 to 7.72, showing that the company's operating income was more than sufficient to cover its interest expenses by a considerable margin. This indicates stronger financial health and the ability to comfortably meet debt obligations.
In 2023, the interest coverage ratio slightly decreased to 4.86 but still remains at a healthy level, suggesting that the company continues to generate enough operating income to cover its interest expenses effectively.
Overall, Marriott Vacations Worldwide Corp's interest coverage has shown some volatility but has generally improved over the years, indicating a strengthening financial position in terms of debt servicing capability.