Waters Corporation (WAT)

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	844,545	817,676	873,395	821,707	645,489
Interest expense	US$ in thousands	89,677	98,861	48,797	44,938	49,070
Interest coverage		9.42	8.27	17.90	18.29	13.15

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $844,545K ÷ $89,677K
= 9.42

Interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. In the case of Waters Corporation, the interest coverage ratio has shown some fluctuations over the years.

As of December 31, 2020, the company's interest coverage ratio was 13.15, which indicates that Waters Corporation generated operating income more than 13 times its interest expenses, reflecting a healthy financial position.

Subsequently, the interest coverage ratio improved in the following years, reaching 18.29 as of December 31, 2021, and 17.90 as of December 31, 2022. These higher ratios suggest that the company's operating income continued to comfortably cover its interest obligations.

However, there was a decline in the interest coverage ratio to 8.27 as of December 31, 2023, and a slight increase to 9.42 as of December 31, 2024. These lower ratios may indicate a potential strain on Waters Corporation's ability to cover its interest expenses with its operating income in those particular years.

Overall, while Waters Corporation has generally maintained a reasonable interest coverage ratio over the period analyzed, the recent fluctuation in the ratio suggests the need for the company to closely monitor its ability to meet interest obligations in the future.