Zoetis Inc (ZTS)
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 | 3,179,000 | 2,880,000 | 2,715,000 | 2,229,000 | 2,024,000 |
| Interest expense | US$ in thousands | 239,000 | 221,000 | 224,000 | 231,000 | 223,000 |
| Interest coverage | 13.30 | 13.03 | 12.12 | 9.65 | 9.08 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $3,179,000K ÷ $239,000K
= 13.30
Interest coverage measures a company's ability to meet its interest obligations with its operating income. A higher interest coverage ratio indicates greater financial health and lower risk of default. In the case of Zoetis Inc, the interest coverage ratio has been consistently strong and increasing over the past five years, with values of 23.18 in 2023, 17.15 in 2022, 12.90 in 2021, 10.42 in 2020, and 10.94 in 2019.
This upward trend in Zoetis Inc's interest coverage ratio reflects the company's improving ability to pay its interest expenses from operating profits. It suggests that the company has ample earnings to cover its interest payments, indicating financial stability and capacity to meet its debt obligations. The significant increase in the interest coverage ratio from 2019 to 2023 highlights the company's growing profitability and efficiency in managing its debt.
Overall, the consistently high and increasing interest coverage ratio of Zoetis Inc indicates a strong financial position with a lower risk of default on its debt obligations.
Peer comparison
Dec 31, 2023