Altair Engineering Inc (ALTR)

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	38,466	18,735	-23,836	11,777	13,630
Interest expense	US$ in thousands	5,836	6,116	4,377	12,065	11,598
Interest coverage		6.59	3.06	-5.45	0.98	1.18

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $38,466K ÷ $5,836K
= 6.59

Altair Engineering Inc's interest coverage ratio measures the company's ability to meet its interest obligations using its operating income. A higher interest coverage ratio indicates a better ability to cover interest payments.

Looking at the data provided, Altair Engineering Inc's interest coverage has fluctuated over the past few years. In December 31, 2020, the interest coverage was 1.18, indicating that the company's operating income was just able to cover its interest expenses. However, by December 31, 2021, the interest coverage decreased to 0.98, suggesting a slight weakening in the company's ability to cover interest payments.

The year December 31, 2022 shows a negative interest coverage of -5.45, which implies that Altair Engineering Inc's operating income was insufficient to cover its interest expenses. This may raise concerns about the company's financial health and its ability to meet its debt obligations.

In December 31, 2023, the interest coverage ratio improved significantly to 3.06, indicating a better ability to cover interest payments compared to the previous year. Furthermore, by December 31, 2024, the interest coverage ratio increased even more to 6.59, signaling a strong improvement in Altair Engineering Inc's ability to meet its interest obligations.

Overall, Altair Engineering Inc's interest coverage has shown volatility over the years, with periods of weakness and improvement. It is important for investors and creditors to closely monitor this ratio to assess the company's financial health and risk of default.