Advanced Energy Industries Inc (AEIS)
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 | 77,482 | 113,694 | 245,227 | 157,253 | 189,189 |
| Interest expense | US$ in thousands | 25,105 | 16,566 | 7,213 | 4,959 | 5,752 |
| Interest coverage | 3.09 | 6.86 | 34.00 | 31.71 | 32.89 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $77,482K ÷ $25,105K
= 3.09
Interest coverage measures a company's ability to meet its interest obligations with its operating income. Looking at the data provided for Advanced Energy Industries Inc, the interest coverage ratio has shown a generally healthy trend from 2020 to 2022, with the ratios ranging from 31.71 to 34.00, indicating that the company's operating income was sufficient to cover its interest expenses during these years.
However, a significant drop in interest coverage is observed in 2023 and 2024, with ratios of 6.86 and 3.09 respectively. This decline may raise concerns as it suggests that the company's ability to cover its interest payments from its operating income has weakened substantially during these years.
A decreasing interest coverage ratio could indicate increased financial risk for Advanced Energy Industries Inc as it may struggle to meet its interest obligations in the future. It is important for investors and analysts to closely monitor the company's financial performance and leverage levels to assess its ability to manage its debt obligations effectively.
Peer comparison
Dec 31, 2024