NCR Voyix Corporation (VYX)
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 | -65,000 | -29,000 | 173,000 | -62,000 | 164,000 |
| Interest expense | US$ in thousands | 134,000 | 294,000 | 285,000 | 238,000 | 218,000 |
| Interest coverage | -0.49 | -0.10 | 0.61 | -0.26 | 0.75 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $-65,000K ÷ $134,000K
= -0.49
The interest coverage ratio is a financial metric used to evaluate a company's ability to meet its interest payments on outstanding debt. A higher interest coverage ratio indicates the company is more capable of servicing its debt obligations.
Analyzing the interest coverage ratios of NCR Voyix Corporation over the years, we observe a concerning trend. In December 31, 2020, the interest coverage ratio was 0.75, indicating that the company's operating income was only able to cover 75% of its interest expenses. This ratio declined further in the subsequent years, reaching -0.26 in December 31, 2021, implying that the company's operating income was insufficient to cover its interest expenses, and it had a negative coverage.
Although there was a slight improvement in the interest coverage ratio in December 31, 2022, at 0.61, it was still below the ideal threshold of 1, indicating a risk in meeting interest obligations. However, the ratios for December 31, 2023, and December 31, 2024, deteriorated further to -0.10 and -0.49, respectively, signifying significant financial stress and an inability to cover interest expenses.
Overall, the downward trend in NCR Voyix Corporation's interest coverage ratios raises concerns about its financial health and ability to fulfill its debt obligations. It suggests a potential risk of default or increased financial distress if the trend persists. Vigilant monitoring and strategic financial management are essential to address these challenges and improve the company's financial stability.