Today we bring you the updated analysis (9M 2021) of the interest coverage ratio of Croatian companies.
The interest coverage ratio is used as a measure that gives us an insight into the company’s ability to meet its interest payments. The ratio is calculated by dividing the company’s operating profit by interest expenses. Therefore, a higher ratio indicates that the company is less burdened by debt and the other way around. A ratio lower than 1 indicates that the company’s operating profit is not sufficient to cover the interest payments. We used 9M 2021 figures for calculating the interest coverage ratio of Croatian companies.
As can be seen on this graph, the best performing company is Ericsson NT which operates with the highest interest coverage ratio of 93.8x. Considering Ericsson NT’s low debt, this does not come as a surprise. Following Ericsson NT are Končar, Podravka, Kraš, and Atlantic Grupa, with 43.8x, 33.8x, 32.8x, and 26.8x respectively. All of the aforementioned companies operate with low debt levels.
All the remaining observed companies have an interest ratio of under 10, with the most interesting case being Optima Telekom. When compared to Q1 2021, they have increased their interest coverage ratio from 0.2 to 1.2.