Name: Interest Coverage

Definition: Interest coverage tells you how easily the company can pay interest on its debt using operating profits. It’s like asking: “Can the company comfortably make its loan payments, or is it barely scraping by?” The higher the ratio, the safer. A very low ratio means debt payments may strain the business, especially if profits drop.

Interpretation:
• In '2021', JNJ's interest coverage was 105.80, indicating the firm's ability to meet its interest obligations. Industry average for Biotechnology: Pharmaceutical Preparations in '2021' stood at -1.09.
• In '2022', JNJ's interest coverage was 71.14, indicating the firm's ability to meet its interest obligations. The decline from '2021' may indicate some operational or financial challenges. Industry average for Biotechnology: Pharmaceutical Preparations in '2022' stood at -2.47. Industry average declined by 1.38 from previous year.
• In '2023', JNJ's interest coverage was 20.51, indicating the firm's ability to meet its interest obligations. The decline from '2022' may indicate some operational or financial challenges. Industry average for Biotechnology: Pharmaceutical Preparations in '2023' stood at -2.43. Industry average increased by 0.04 compared to previous year.
• In '2024', JNJ's interest coverage was 23.10, indicating the firm's ability to meet its interest obligations. The increase since '2023' reflects strengthening financial performance. Industry average for Biotechnology: Pharmaceutical Preparations in '2024' stood at -2.27. Industry average increased by 0.16 compared to previous year.
Overall, JNJ's interest coverage has been volatile but showed a downward trend over the past 4 years.

Formula: Interest Coverage = EBIT / Interest Expense

Good Range: Minimum 3-5 desirable; below 1 is risky.