Align Technology Inc (ALGN)

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	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	675,330	671,118	671,534	621,697	601,078	543,519	480,959	502,989	530,403	635,094	757,903	844,045	908,561	901,733	852,207	542,699	387,171	325,137	268,428	466,918
Interest expense (ttm)	US$ in thousands	8,502	9,837	13,001	10,163	7,020	8,445	5,895	5,798	5,367	3,487	2,630	2,485	37,983	45,325	51,973	52,366	32,754	24,532	17,056	16,563
Interest coverage		79.43	68.22	51.65	61.17	85.62	64.36	81.59	86.75	98.83	182.13	288.18	339.66	23.92	19.89	16.40	10.36	11.82	13.25	15.74	28.19

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $675,330K ÷ $8,502K
= 79.43

Align Technology Inc's interest coverage ratio has shown significant fluctuations over the past few years. The interest coverage ratio measures the company's ability to cover its interest obligations with its operating income.

At the end of March 2020, the interest coverage ratio stood at a healthy 28.19, indicating that Align Technology had a comfortable margin to cover its interest payments. However, this ratio started declining in the subsequent quarters, reaching a low of 10.36 by March 31, 2021. This significant decrease may suggest that Align Technology's ability to cover its interest expenses with operating income had deteriorated.

From June 2021 to March 2022, the interest coverage ratio improved significantly to over 200, indicating a substantial increase in the company's ability to cover its interest obligations. This improvement continued into the following quarters, with the ratio remaining above 50 until December 2024.

The notable fluctuation in the interest coverage ratio indicates that Align Technology's ability to cover its interest payments has varied over time. It is essential for investors to closely monitor this ratio to assess the company's financial health and its ability to meet its debt obligations with operating income.