Yum! Brands Inc (YUM)
Interest coverage
| 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 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 2,318,000 | 2,287,000 | 2,220,000 | 2,201,000 | 2,187,000 | 2,111,000 | 2,092,000 | 2,105,000 | 2,139,000 | 2,119,000 | 2,063,000 | 1,796,000 | 1,503,000 | 1,567,000 | 1,576,000 | 1,747,000 | 1,930,000 | 2,125,000 | 2,198,000 | 2,176,000 |
| Interest expense (ttm) | US$ in thousands | 513,000 | 518,000 | 516,000 | 539,000 | 527,000 | 941,000 | 805,000 | 661,000 | 555,000 | 136,000 | 309,000 | 437,000 | 543,000 | 931,000 | 771,000 | 639,000 | 522,000 | 124,000 | 234,000 | 346,000 |
| Interest coverage | 4.52 | 4.42 | 4.30 | 4.08 | 4.15 | 2.24 | 2.60 | 3.18 | 3.85 | 15.58 | 6.68 | 4.11 | 2.77 | 1.68 | 2.04 | 2.73 | 3.70 | 17.14 | 9.39 | 6.29 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $2,318,000K ÷ $513,000K
= 4.52
The interest coverage ratio measures a company's ability to meet its interest obligations on its debt with its operating income. A higher ratio indicates a better ability to cover interest payments.
Looking at the data provided for Yum Brands Inc., we can observe a consistent trend of improving interest coverage ratios over the past eight quarters. The interest coverage ratios have ranged from 3.92 to 4.49 during this period.
The highest interest coverage ratio was observed in Q4 2023 at 4.49, indicating that the company generated 4.49 times the operating income necessary to cover its interest expenses during that quarter. This suggests a strong and consistent ability to meet its interest obligations.
Overall, the trend of increasing interest coverage ratios over the past quarters demonstrates Yum Brands' improving financial health and ability to comfortably service its debt through its operational earnings. This positive trend indicates a lower risk of financial distress due to insufficient operating income to cover interest payments.
Peer comparison
Dec 31, 2023