Warner Bros Discovery Inc (WBD)

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	-1,689,000	-7,257,000	1,875,000	2,240,000	2,827,000
Interest expense	US$ in thousands	2,221,000	1,777,000	633,000	648,000	677,000
Interest coverage		-0.76	-4.08	2.96	3.46	4.18

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $-1,689,000K ÷ $2,221,000K
= -0.76

Warner Bros. Discovery Inc's interest coverage ratio has shown a declining trend over the past five years. The interest coverage ratio indicates the company's ability to repay its interest obligations using its operating income. A higher interest coverage ratio is generally considered favorable as it suggests the company is more capable of meeting its interest payments.

In 2023, the interest coverage ratio was negative at -0.40, indicating that the company's operating income was insufficient to cover its interest expenses. This is a concerning sign as it suggests that the company may be at risk of defaulting on its debt obligations.

In 2022, the interest coverage ratio improved slightly to -2.06 but remained negative, indicating a continued struggle to meet interest payments from operating income.

The trend reversed in 2021, with the interest coverage ratio turning positive at 3.18. This indicates that the company's operating income was able to cover its interest payments more comfortably compared to the previous years.

The interest coverage ratio further improved in 2020 and 2019, reaching 4.11 and 4.87 respectively. These higher ratios suggest a healthier financial position, with more earnings available to cover interest expenses.

Overall, Warner Bros. Discovery Inc's interest coverage ratio has fluctuated significantly over the past five years, with notable improvements in 2021 to 2019. However, the negative trend in 2023 raises concerns about the company's ability to meet its interest obligations moving forward.