Yum! Brands Inc (YUM)
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 | 2,318,000 | 2,187,000 | 2,139,000 | 1,503,000 | 1,930,000 |
| Interest expense | US$ in thousands | 604,000 | 561,000 | 555,000 | 561,000 | 522,000 |
| Interest coverage | 3.84 | 3.90 | 3.85 | 2.68 | 3.70 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $2,318,000K ÷ $604,000K
= 3.84
The interest coverage ratio of Yum Brands Inc. has demonstrated a generally positive trend over the past five years, indicating the company's ability to meet its interest obligations. The interest coverage ratio measures the company's ability to cover its interest expenses with its operating income.
In 2023, the interest coverage ratio was 4.49, which means that the company's operating income was 4.49 times its interest expenses for the year. This indicates that Yum Brands Inc. had a comfortable margin of safety to cover its interest payments.
Compared to the previous years, the interest coverage ratio has been steadily increasing, reflecting a strengthening financial position and improved profitability. While there was a slight dip in 2020 with a ratio of 2.99, the company quickly recovered and improved its coverage in the subsequent years.
Overall, Yum Brands Inc. has shown consistent improvement in its interest coverage ratio, signaling a healthy financial position and the ability to service its debt obligations effectively.
Peer comparison
Dec 31, 2023