Marriot Vacations Worldwide (VAC)
Interest coverage
| 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 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 513,000 | 557,000 | 381,000 | 454,000 | 494,000 | 548,000 | 806,000 | 865,000 | 831,000 | 776,000 | 664,000 | 533,000 | 414,000 | 314,000 | 186,000 | 44,000 | 3,000 | 129,000 | 271,000 | 443,000 |
| Interest expense (ttm) | US$ in thousands | 162,000 | 162,000 | 158,000 | 151,000 | 145,000 | 133,000 | 131,000 | 125,000 | 118,000 | 127,000 | 134,000 | 148,000 | 164,000 | 166,000 | 162,000 | 160,000 | 150,000 | 144,000 | 138,000 | 131,000 |
| Interest coverage | 3.17 | 3.44 | 2.41 | 3.01 | 3.41 | 4.12 | 6.15 | 6.92 | 7.04 | 6.11 | 4.96 | 3.60 | 2.52 | 1.89 | 1.15 | 0.28 | 0.02 | 0.90 | 1.96 | 3.38 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $513,000K ÷ $162,000K
= 3.17
Marriot Vacations Worldwide interest coverage ratio has shown fluctuation over the past few years, reflecting the company's ability to meet its interest obligations. The interest coverage ratio, which measures the company's ability to cover its interest expenses with its operating income, declined significantly from 3.38 as of March 31, 2020, to a low of 0.02 as of December 31, 2020. This indicates that the company's operating income was insufficient to cover its interest expenses during that period.
Subsequently, the interest coverage ratio improved, reaching a peak of 7.04 as of December 31, 2022. This significant improvement suggests that Marriot Vacations Worldwide was able to generate more operating income relative to its interest expenses, improving its financial health.
However, the interest coverage ratio started to decline slightly in the following periods, stabilizing around 3-4 from March 31, 2023, to December 31, 2024. While the ratio remained above 1 during these periods, indicating that the company's operating income can cover its interest payments, the declining trend might be a cause for monitoring as it could signal a potential strain on the company's ability to meet its debt obligations in the future.
Overall, the fluctuation in Marriot Vacations Worldwide's interest coverage ratio highlights the importance of monitoring the company's ability to generate sufficient operating income to cover its interest expenses, ensuring its financial stability and long-term sustainability.