For today we decided to present you with the updated analysis (Q1 2021) of the interest coverage ratio of Croatian companies.
Interest coverage ratio is used as a measure which gives us an insight on the company’s ability to meet its interest payments. The ratio is calculated by dividing the company’s operating profit by the 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 for the interest payments. We used Q1 2021 figures for calculating the interest coverage ratio of Croatian companies.
Interest Coverage Ratio (Q1 2021)
As illustrated on the graph, Ericsson NT operates with the highest interest coverage ratio of 133.9. It does not come with a surprise considering that Ericsson NT operates with low debt (negative net debt). Podravka and Končar come next with 57.3 and 34.8, respectively. Two food companies that follow are: Kraš and Atlantic Grupa, with 28.7 and 26.8. We also note all of these companies operate with very low debt.
On the flip side, three tourist companies were excluded from the calculation as they reported an operating loss. The only company (of the observed) to have its interest coverage ratio below 1 is Optima Telekom. To be specific, the company operates with an interest coverage ratio of as low as 0.2 showing quite a high debt burden compared to its operating profit. To read more about the company’s Q1 2021 results, click here.