Warner Music Group (WMG)
Interest coverage
| Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 823,000 | 892,000 | 874,000 | 879,000 | 790,000 | 741,000 | 698,000 | 740,000 | 714,000 | 651,000 | 667,000 | 652,000 | 609,000 | 597,000 | 2,000 | -198,000 | -229,000 | -288,000 | 203,000 | 374,000 |
| Interest expense (ttm) | US$ in thousands | 182,000 | 179,000 | 174,000 | 166,000 | 158,000 | 148,000 | 139,000 | 133,000 | 125,000 | 122,000 | 120,000 | 120,000 | 122,000 | 122,000 | 124,000 | 125,000 | 127,000 | 132,000 | 136,000 | 139,000 |
| Interest coverage | 4.52 | 4.98 | 5.02 | 5.30 | 5.00 | 5.01 | 5.02 | 5.56 | 5.71 | 5.34 | 5.56 | 5.43 | 4.99 | 4.89 | 0.02 | -1.58 | -1.80 | -2.18 | 1.49 | 2.69 |
September 30, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $823,000K ÷ $182,000K
= 4.52
Warner Music Group's interest coverage ratio has shown a generally positive trend over the past two years, reflecting the company's ability to cover its interest expenses with its operating earnings. The interest coverage ratio increased from 2.69 in December 2019 to a peak of 5.71 in September 2022, indicating a significant improvement in the company's financial position.
However, there were periods of volatility in the interest coverage ratio, as seen in the significant declines in March and December 2021, and the negative ratios reported in the first quarter of 2020 and 2021. These fluctuations may be attributed to changes in the company's earnings and/or interest expenses during those periods.
It is essential to note that negative interest coverage ratios, as observed in some quarters, indicate that Warner Music Group may have had difficulty meeting its interest obligations with its operating income during those periods. This situation can raise concerns about the company's financial health and ability to service its debt obligations.
Overall, while the recent trend in interest coverage ratios is positive, investors and creditors should closely monitor future financial performance to ensure that Warner Music Group can consistently generate enough operating income to comfortably cover its interest expenses and maintain financial stability.
Peer comparison
Sep 30, 2024