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.