Viatris Inc (VTRS)

Interest coverage

		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
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	766,200	1,019,400	1,127,800	1,307,300	1,614,900	1,738,600	1,536,100	939,600	-34,000	-837,500	-826,100	-1,042,000	-1,053,400
Interest expense (ttm)	US$ in thousands	573,100	579,300	591,000	593,200	592,400	593,500	592,200	613,400	636,200	632,400	597,800	546,900	503,900
Interest coverage		1.34	1.76	1.91	2.20	2.73	2.93	2.59	1.53	-0.05	-1.32	-1.38	-1.91	-2.09

December 31, 2023 calculation

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

The interest coverage ratio for Viatris Inc has shown a decreasing trend over the past four quarters, from 3.40 in Q3 2022 to 1.72 in Q4 2023. This indicates that the company's ability to cover its interest expenses with its earnings has weakened.

A ratio below 1 would suggest that the company is not generating enough operating income to cover its interest expenses, which could raise concerns about its financial health and ability to meet its debt obligations. However, all the ratios provided are above 1, indicating that the company is still able to cover its interest expenses with its earnings.

It is important to note that an interest coverage ratio above 1 is generally considered favorable, as it shows that the company is generating enough operating income to comfortably cover its interest expenses. However, investors and analysts typically prefer to see a higher ratio, closer to 2 or above, which would indicate a greater level of financial stability and lower risk.

Overall, Viatris Inc's interest coverage ratio has been fluctuating over the quarters, and although it has decreased recently, the company is still managing to cover its interest expenses with its earnings. Investors may want to monitor this ratio closely to ensure that the company's financial position remains sound.