Advanced Micro Devices Inc (AMD)

Interest coverage

		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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	614,000	103,000	-221,000	273,000	1,286,000	2,611,000	3,661,000	3,968,000	3,709,000	3,056,000	2,457,000	1,799,000	1,327,000	992,000	730,000	617,000	466,000	275,000	268,000	359,000
Interest expense (ttm)	US$ in thousands	106,000	98,000	103,000	100,000	88,000	77,000	53,000	38,000	34,000	35,000	39,000	43,000	47,000	56,000	69,000	80,000	94,000	105,000	111,000	117,000
Interest coverage		5.79	1.05	-2.15	2.73	14.61	33.91	69.08	104.42	109.09	87.31	63.00	41.84	28.23	17.71	10.58	7.71	4.96	2.62	2.41	3.07

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $614,000K ÷ $106,000K
= 5.79

The interest coverage ratio measures a company's ability to meet its interest obligations through its operating income. In the case of Advanced Micro Devices Inc, the interest coverage ratio has fluctuated over the past few quarters. A value above 1 indicates that the company is generating enough operating income to cover its interest expenses.

From December 2019 to September 2020, the interest coverage ratio for Advanced Micro Devices Inc was relatively low, ranging from 2.41 to 4.96. However, this ratio significantly improved in the subsequent quarters, with the highest interest coverage ratio of 109.09 recorded in March 2022.

The company's interest coverage ratio then saw a decline in the following quarters, hitting a low of -2.15 in June 2023, indicating financial stress. However, this was followed by a notable recovery with a ratio of 5.79 in December 2023, suggesting an improvement in the company's ability to cover its interest expenses.

Overall, variability in the interest coverage ratio of Advanced Micro Devices Inc reflects fluctuations in its operating income and interest expenses over the analyzed periods. Investors and stakeholders may track this ratio to assess the company's financial health and ability to meet its debt obligations.