Allegro Microsystems Inc (ALGM)

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 23, 2022	Sep 23, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	-21,359	18,710	125,277	205,369	251,418	283,922	269,730	213,386	175,283	142,255	121,226	140,978	129,888	66,020	39,868
Interest expense (ttm)	US$ in thousands	28,874	24,966	15,371	10,763	6,136	2,895	2,668	2,177	1,840	1,654	2,351	2,098	5,282	7,453	6,575
Interest coverage		-0.74	0.75	8.15	19.08	40.97	98.07	101.10	98.02	95.26	86.01	51.56	67.20	24.59	8.86	6.06

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-21,359K ÷ $28,874K
= -0.74

Allegro Microsystems Inc's interest coverage ratio has shown fluctuating trends over the period analyzed. Starting from June 30, 2021, with a ratio of 6.06, it increased steadily, reaching a peak of 101.10 on June 30, 2023. This indicates that the company's operating income was well able to cover its interest expenses during this period.

However, there was a notable decline in interest coverage as of December 31, 2023, dropping to 40.97. Subsequently, the ratio experienced a significant decrease, falling into negative territory on December 31, 2024, indicating that the company's operating income was not sufficient to cover its interest payments during that period.

The decreasing trend in interest coverage from December 31, 2023, onwards could raise concerns about Allegro Microsystems Inc's ability to meet its interest obligations from its operating income. It may suggest potential financial strain or increased leverage, which could impact the company's financial health and sustainability in the long run. Monitoring this ratio and investigating the reasons behind the declining trend would be crucial for assessing the company's financial stability and risk management.