Viatris Inc (VTRS)
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 | -73,200 | 777,800 | 3,405,600 | -28,200 | -227,900 |
| Interest expense | US$ in thousands | 550,000 | 573,100 | 592,400 | 636,200 | 497,800 |
| Interest coverage | -0.13 | 1.36 | 5.75 | -0.04 | -0.46 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $-73,200K ÷ $550,000K
= -0.13
Interest coverage ratio is a financial metric used to assess a company's ability to meet its interest payment obligations on outstanding debt. A higher interest coverage ratio indicates a healthier financial position, as the company is better able to cover its interest expenses.
Analyzing Viatris Inc's interest coverage ratio over the past years reveals significant fluctuations. In December 2020 and 2021, the company had negative interest coverage ratios, indicating that its earnings were insufficient to cover its interest expenses. This raises concerns about the company's financial health and ability to service its debt obligations during those periods.
However, there was a notable improvement in December 2022, with an interest coverage ratio of 5.75, suggesting that Viatris Inc's earnings were more than sufficient to cover its interest payments. This could be seen as a positive development indicating a better financial position and reduced risk of default.
In December 2023, the interest coverage ratio decreased to 1.36, indicating that while the company's earnings could cover its interest expenses, the margin of safety was relatively narrow. The decrease in the ratio may warrant further monitoring to ensure the company's financial stability.
By December 2024, the interest coverage ratio once again turned negative at -0.13, signaling a concerning situation where the company's earnings were insufficient to cover its interest payments. This could raise red flags about the company's ability to meet its debt obligations and service its debt effectively.
Overall, the fluctuations in Viatris Inc's interest coverage ratio reflect varying levels of financial strength and risk exposure over the analyzed period. It is essential for investors and stakeholders to closely monitor this ratio to assess the company's ability to manage its debt and ensure its long-term financial stability.
Peer comparison
Dec 31, 2024