Viatris Inc (VTRS)

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	766,200	1,614,900	-34,000	-210,800	654,900
Interest expense	US$ in thousands	573,100	592,400	636,200	497,800	517,300
Interest coverage		1.34	2.73	-0.05	-0.42	1.27

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $766,200K ÷ $573,100K
= 1.34

Interest coverage measures a company's ability to pay its interest expenses on outstanding debt. Higher values indicate a strong ability to meet interest obligations, while lower values may signal potential financial distress.

Viatris Inc's interest coverage has fluctuated significantly over the past five years, ranging from negative values to positive values. In 2023, the interest coverage ratio improved to 1.72 from 0.37 in 2021 but remained below the levels seen in 2022 and 2019. This suggests a moderate ability to cover interest payments.

The sharp increase in 2023 indicates an improvement in the company's ability to meet interest obligations compared to 2021 and 2020 when the ratios were lower. However, the ratio is still below the levels achieved in 2022 and 2019. It would be important for Viatris to sustain or further improve its interest coverage ratio to ensure sufficient financial stability and debt servicing capability.