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', NFLX's interest coverage was 8.63, indicating the firm's ability to meet its interest obligations. Industry average for Consumer Electronics/Video Chains in '2021' stood at 3.49.
• In '2022', NFLX's interest coverage was 8.45, indicating the firm's ability to meet its interest obligations. The decline from '2021' may indicate some operational or financial challenges. Industry average for Consumer Electronics/Video Chains in '2022' stood at 6.11. Industry average increased by 2.62 compared to previous year.
• In '2023', NFLX's interest coverage was 9.29, indicating the firm's ability to meet its interest obligations. The increase since '2022' reflects strengthening financial performance. Industry average for Consumer Electronics/Video Chains in '2023' stood at 2.55. Industry average declined by 3.55 from previous year.
• In '2024', NFLX's interest coverage was 14.87, indicating the firm's ability to meet its interest obligations. The increase since '2023' reflects strengthening financial performance. Industry average for Consumer Electronics/Video Chains in '2024' stood at -0.28. Industry average declined by 2.83 from previous year.
Overall, NFLX's interest coverage has been volatile but showed an upward trend over the past 4 years.

Formula: Interest Coverage = EBIT / Interest Expense

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