Vertex Pharmaceuticals Inc (VRTX)

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	-232,900	-270,400	-348,600	4,192,500	3,832,000	3,877,000	3,965,600	4,045,500	4,307,400	4,151,600	4,079,400	2,935,200	2,782,100	2,809,311	2,514,538	3,391,079	3,174,949	2,961,237	2,286,724	1,790,058
Interest expense (ttm)	US$ in thousands	30,600	38,400	41,800	43,100	44,100	45,100	47,900	51,300	54,800	58,300	59,855	60,733	61,511	62,699	61,300	59,693	58,151	56,112	56,804	57,770
Interest coverage		-7.61	-7.04	-8.34	97.27	86.89	85.96	82.79	78.86	78.60	71.21	68.15	48.33	45.23	44.81	41.02	56.81	54.60	52.77	40.26	30.99

December 31, 2024 calculation

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

The interest coverage ratio indicates Vertex Pharmaceuticals Inc's ability to meet its interest obligations with its earnings before interest and taxes (EBIT). A higher interest coverage ratio is generally considered favorable as it suggests the company can easily cover its interest expenses.

Looking at the data provided, Vertex Pharmaceuticals Inc's interest coverage ratio has displayed some fluctuation over the periods. The ratio ranged from 30.99 in March 2020 to a peak of 97.27 in March 2024, which suggests a strong ability to cover interest payments with operating income during this period.

However, there were instances where the interest coverage ratio dropped below 1, specifically in June 2024, September 2024, and December 2024. This implies that in those particular quarters, Vertex Pharmaceuticals Inc may have had difficulty meeting its interest obligations with its earnings.

It is important to assess the reasons behind the significant decrease in the interest coverage ratio during those quarters to understand if it was due to temporary circumstances or if there are underlying issues that need to be addressed. Overall, while the company has shown a strong interest coverage ratio in many periods, attention should be paid to the quarters where the ratio fell below 1 to ensure the sustainability of the company's financial health.