Align Technology Inc (ALGN)

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	671,764	643,338	599,057	976,400	271,204
Interest expense	US$ in thousands	—	2,134	5,367	36,023	8,222
Interest coverage		—	301.47	111.62	27.10	32.99

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $671,764K ÷ $—K
= —

Interest coverage is a key financial ratio that measures a company's ability to pay interest expenses on its outstanding debt. Looking at Align Technology Inc's interest coverage ratio over the past few years, we see a positive trend.

On December 31, 2020, the interest coverage ratio was 32.99, indicating that the company generated almost 33 times the earnings required to cover its interest expenses. This level of coverage suggests a strong financial position and low risk of defaulting on debt payments.

In the following year, on December 31, 2021, the interest coverage ratio remained healthy at 27.10, showing that Align Technology Inc continued to comfortably cover its interest obligations with its earnings.

By December 31, 2022, the interest coverage ratio significantly improved to 111.62, reflecting a substantial increase in the company's ability to meet its interest payments. This sharp rise suggests improved financial performance and increased profitability.

On December 31, 2023, the interest coverage ratio surged to 301.47, indicating that Align Technology Inc was generating over 300 times the earnings needed to cover its interest expenses. This level of coverage is exceptionally strong and indicates a very low risk of default on debt obligations.

Notably, the data for December 31, 2024, is marked as "—," suggesting that either the data is not available or the interest coverage ratio was not meaningful or relevant for that period.

Overall, Align Technology Inc's interest coverage ratio reflects a positive trend, with the company demonstrating strong financial health and an increasing ability to service its debt obligations with its earnings.