ADEIA CORP (ADEA)
Interest coverage
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 128,609 | 136,230 | 153,060 | 119,028 | 267,455 |
| Interest expense | US$ in thousands | 52,539 | 62,574 | 45,335 | 38,973 | 37,873 |
| Interest coverage | 2.45 | 2.18 | 3.38 | 3.05 | 7.06 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $128,609K ÷ $52,539K
= 2.45
The interest coverage ratio of ADEIA CORP has been decreasing over the past five years. In December 2020, the interest coverage ratio was 7.06, indicating that the company generated 7.06 times more operating income than needed to cover its interest expenses. However, by December 2024, this ratio had decreased to 2.45, suggesting that the company's ability to cover interest payments with operating income has weakened.
This declining trend in the interest coverage ratio raises concerns about ADEIA CORP's financial health. A decreasing interest coverage ratio may indicate that the company is becoming less capable of servicing its debt obligations, which could lead to financial distress or potential default.
It is crucial for ADEIA CORP to closely monitor and address the declining interest coverage ratio to ensure it can meet its interest payment obligations and maintain the confidence of creditors and investors. Implementing measures to improve profitability and cash flow generation may help strengthen the company's ability to cover its interest expenses in the future.
Peer comparison
Dec 31, 2024