Vertex Pharmaceuticals Inc (VRTX)

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	-232,900	3,832,000	4,307,400	2,782,100	3,175,050
Interest expense	US$ in thousands	30,600	38,800	43,500	47,400	58,151
Interest coverage		-7.61	98.76	99.02	58.69	54.60

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $-232,900K ÷ $30,600K
= -7.61

The interest coverage ratio measures a company's ability to meet its interest payment obligations with its operating income. Higher values indicate a stronger ability to cover interest expenses.

For Vertex Pharmaceuticals Inc, the interest coverage ratio has shown a positive trend from 2020 to 2023, increasing from 54.60 to 98.76. This signifies an improvement in the company's ability to cover interest payments with its operating income over the years.

However, there is a notable decrease in the interest coverage ratio in 2024, dropping to -7.61. A negative interest coverage ratio indicates that the company's operating income is insufficient to cover its interest expenses, which may raise concerns about Vertex Pharmaceuticals Inc's financial health and ability to manage its debt obligations in that specific year.

Overall, Vertex Pharmaceuticals Inc has shown a generally favorable trend in interest coverage from 2020 to 2023, but the significant decline in 2024 raises questions about its ability to meet interest payments in that period. It is important for investors and stakeholders to closely monitor this ratio for any potential financial risks.