Verizon Communications Inc (VZ)

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	22,030,000	31,392,000	32,352,000	27,667,000	26,940,000
Interest expense	US$ in thousands	5,524,000	3,613,000	3,485,000	4,247,000	4,730,000
Interest coverage		3.99	8.69	9.28	6.51	5.70

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $22,030,000K ÷ $5,524,000K
= 3.99

Verizon Communications Inc's interest coverage ratio has exhibited some fluctuations over the past five years. The interest coverage ratio measures a company's ability to pay interest expenses on its outstanding debt with its earnings before interest and taxes (EBIT). A higher ratio indicates a greater ability to cover interest expenses.

In 2023, Verizon's interest coverage ratio was 5.54, which represents a decrease from the previous year. This indicates that Verizon's earnings before interest and taxes were 5.54 times greater than its interest expenses for the year. While this ratio is still considered healthy, the decrease from the prior year suggests that Verizon may have had lower profitability or higher interest expenses.

Comparing 2023 to earlier years, the interest coverage ratios were higher in 2022 (8.80) and 2021 (9.35), demonstrating stronger ability to cover interest payments in those years. The ratios in 2020 (6.77) and 2019 (6.46) were also above 5, indicating favorable interest coverage levels.

Overall, Verizon Communications Inc has generally maintained solid interest coverage levels over the past five years, with the ratio fluctuating within a reasonable range. Investors and creditors may view the company positively for its consistent ability to meet interest obligations with its operating earnings. However, the recent decline in interest coverage from 2022 to 2023 may warrant further analysis to understand any underlying factors contributing to this change.