ADEIA CORP (ADEA)

Interest coverage

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	128,609	94,394	106,390	100,471	136,230	146,206	121,731	138,729	153,060	136,784	158,629	155,369	119,028	381,671	325,221	276,041
Interest expense (ttm)	US$ in thousands	52,539	55,666	58,567	60,811	62,574	61,406	58,945	52,845	45,336	39,640	34,974	36,089	38,973	43,671	48,532	44,935
Interest coverage		2.45	1.70	1.82	1.65	2.18	2.38	2.07	2.63	3.38	3.45	4.54	4.31	3.05	8.74	6.70	6.14

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $128,609K ÷ $52,539K
= 2.45

The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt with its operating income. A higher interest coverage ratio indicates a company is more capable of servicing its debt obligations.

Based on the provided data for ADEIA CORP's interest coverage from March 31, 2021, to December 31, 2024, we observe fluctuations in the ratio over time.

The interest coverage ratio started at a healthy level of 6.14 on March 31, 2021, and gradually improved to 8.74 by September 30, 2021, indicating a strong ability to cover interest expenses with operating income.

However, the ratio declined significantly by December 31, 2021, dropping to 3.05, suggesting a decrease in the company's ability to cover interest payments adequately.

The trend continued to be volatile throughout the following years, with some recovery seen in June 30, 2022, but followed by a decline in the ratio in subsequent periods. The ratio remained below 5 in most quarters, indicating a moderate to weak ability to cover interest expenses with operating income.

The decreasing trend and lower interest coverage ratios from March 31, 2022, to December 31, 2024, may raise concerns about ADEIA CORP's financial health and its ability to service its debt obligations comfortably. It would be advisable for stakeholders to further monitor the company's financial performance and debt repayment capabilities.