Dentsply Sirona Inc (XRAY)
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 | -867,000 | -111,000 | 633,772 | 626,000 | 2,000 |
| Interest expense | US$ in thousands | 69,000 | 81,000 | 60,000 | 55,000 | 48,000 |
| Interest coverage | -12.57 | -1.37 | 10.56 | 11.38 | 0.04 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $-867,000K ÷ $69,000K
= -12.57
The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt. Dentsply Sirona Inc's interest coverage has shown significant fluctuations over the past five years.
In 2020, the interest coverage ratio stood at a very low 0.04, indicating that the company was barely able to cover its interest payments with its operating income. This could pose a risk of financial distress.
However, there was a substantial improvement in 2021 with an interest coverage ratio of 11.38, suggesting that the company's ability to meet interest obligations had significantly strengthened. This is a positive sign of financial health.
The trend continued in 2022, with an interest coverage ratio of 10.56, indicating the company's continued strong ability to cover interest expenses with its operating income.
Unfortunately, there was a sharp decline in 2023, where the interest coverage ratio dropped to -1.37. A negative ratio suggests that the company's operating income was insufficient to cover its interest expenses. This could signal financial difficulties and raise concerns about the company's ability to service its debt.
The situation worsened further in 2024, with the interest coverage ratio plummeting to -12.57. This indicates a severe strain on the company's finances and may raise red flags for investors and creditors.
In conclusion, while there were improvements in 2021 and 2022, the sharp declines in 2023 and 2024 highlight the importance of closely monitoring Dentsply Sirona Inc's ability to meet its interest obligations and manage its debt levels effectively.
Peer comparison
Dec 31, 2024