Zimmer Biomet Holdings Inc (ZBH)
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 | 1,285,700 | 1,277,700 | 696,300 | 860,300 | 83,100 |
| Interest expense | US$ in thousands | 218,000 | 201,200 | 164,800 | 208,400 | 212,000 |
| Interest coverage | 5.90 | 6.35 | 4.23 | 4.13 | 0.39 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,285,700K ÷ $218,000K
= 5.90
To analyze Zimmer Biomet Holdings Inc's interest coverage ratio over the years, we observe a significant improvement in the company's ability to cover its interest expenses.
In December 31, 2020, Zimmer Biomet had an interest coverage ratio of 0.39, indicating a potential risk as the company's operating income was insufficient to cover its interest payments. However, in the subsequent years, the interest coverage ratio improved substantially.
By December 31, 2021, the ratio had increased to 4.13, showing a more favorable position as the company generated enough operating income to cover its interest obligations over four times. This positive trend continued as the ratios for December 31, 2022, December 31, 2023, and December 31, 2024 were 4.23, 6.35, and 5.90, respectively.
The steady increase in Zimmer Biomet's interest coverage ratio suggests a strengthening financial position and better capacity to meet its interest payments. It indicates improving financial health and reduced risk of default due to interest payment obligations over the years. However, it is important for the company to continue monitoring and maintaining this trend to ensure long-term financial stability.
Peer comparison
Dec 31, 2024