Verra Mobility Corp (VRRM)

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	143,488	241,867	233,824	228,866	224,614	208,225	194,550	183,500	165,405	163,134	168,071	154,416	119,773	89,502	59,317	17,945	42,920	59,835	78,971	109,818
Interest expense (ttm)	US$ in thousands	73,902	78,062	79,723	83,649	86,701	86,190	86,066	77,780	69,372	61,485	52,862	50,057	44,942	41,778	39,719	37,578	40,865	45,676	51,030	57,147
Interest coverage		1.94	3.10	2.93	2.74	2.59	2.42	2.26	2.36	2.38	2.65	3.18	3.08	2.67	2.14	1.49	0.48	1.05	1.31	1.55	1.92

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $143,488K ÷ $73,902K
= 1.94

The interest coverage ratio measures a company's ability to pay interest on its outstanding debt with its operating income. A higher interest coverage ratio indicates that the company is more capable of meeting its interest obligations.

Analyzing Verra Mobility Corp's interest coverage data from March 31, 2020, to December 31, 2024, we observe fluctuations in the ratio over time. The interest coverage ratio stood at 1.92 on March 31, 2020, indicating that the company's operating income was able to cover its interest expenses nearly two times.

However, there was a decline in the interest coverage ratio in subsequent periods, reaching a low of 0.48 on March 31, 2021, which suggests that the company's operating income at that time was barely sufficient to cover its interest payments. This could be a cause for concern as a low interest coverage ratio could indicate financial distress.

Subsequently, we see an improvement in the interest coverage ratio, with the ratio increasing to 3.18 on June 30, 2022, and maintaining levels above 2 in the following periods. This improvement indicates that Verra Mobility Corp's operating income was more than able to cover its interest expenses, showing a stronger financial position and reduced risk of default.

However, there was a slight dip in the interest coverage ratio to 1.94 on December 31, 2024. It is important for the company to monitor this metric closely to ensure it maintains a healthy ratio to meet its interest obligations comfortably in the long run.

Overall, the trend in Verra Mobility Corp's interest coverage ratio reflects fluctuations but generally shows a positive trajectory towards improved financial health and stability.