Akamai Technologies Inc (AKAM)

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	533,411	671,711	661,464	786,545	672,096
Interest expense	US$ in thousands	25,836	17,709	11,096	72,332	69,120
Interest coverage		20.65	37.93	59.61	10.87	9.72

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $533,411K ÷ $25,836K
= 20.65

Interest coverage ratio is a financial metric that indicates a company's ability to meet its interest obligations on outstanding debt. It is calculated by dividing earnings before interest and taxes (EBIT) by the interest expense. A higher interest coverage ratio is generally favorable as it implies the company has more earnings available to cover its interest expenses.

For Akamai Technologies Inc, the interest coverage ratios over the years show a positive trend. In December 31, 2020, the interest coverage ratio was 9.72, indicating that the company's earnings were 9.72 times its interest expense. Over the subsequent years, the interest coverage ratio improved significantly to 10.87 in December 31, 2021, 59.61 in December 31, 2022, 37.93 in December 31, 2023, and further to 20.65 in December 31, 2024.

The increasing trend in the interest coverage ratios reflects a strong ability of Akamai Technologies Inc to comfortably meet its interest obligations. This suggests that the company's earnings are sufficient to cover its interest expenses, implying financial stability and lower risk of default on its debt obligations. However, it is important to continue monitoring this ratio to ensure that the trend remains positive and sustainable in the long term.