Amphastar P (AMPH)

Interest coverage

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Earnings before interest and tax (EBIT)	US$ in thousands	196,536	116,709	83,631	5,317	62,781
Interest expense	US$ in thousands	27,158	1,846	885	374	119
Interest coverage		7.24	63.22	94.50	14.22	527.57

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $196,536K ÷ $27,158K
= 7.24

The interest coverage ratio indicates the company's ability to meet its interest obligations on outstanding debt. A higher interest coverage ratio is generally favorable as it suggests that the company has sufficient earnings to cover its interest expenses.

Analyzing the interest coverage ratios of Amphastar Pharmaceuticals Inc from 2019 to 2023, we observe a fluctuating trend. In 2019 and 2020, the interest coverage ratios were not provided, indicating a lack of data for those years. However, from 2021 to 2023, the interest coverage ratios show an improving trend.

In 2021, the interest coverage ratio was 245.35, which indicates that the company's operating income was 245 times its interest expenses for that year. This exceptionally high ratio suggests a strong ability to cover interest payments from its earnings.

The interest coverage ratio decreased to 202.51 in 2022 but remained at a healthy level, indicating a minor decline in the ability to cover interest expenses compared to the previous year.

In 2023, the interest coverage ratio further declined to 8.99, which is a significant decrease from the previous years. While this ratio is still above 1, suggesting that the company's earnings are still sufficient to cover interest payments, the notable decrease may raise concerns about a potential decrease in earnings relative to interest expenses.

Overall, the trend of the interest coverage ratios of Amphastar Pharmaceuticals Inc shows fluctuation over the years, with 2021 showing exceptionally strong coverage, while 2023 reveals a significant reduction in this financial metric. It would be prudent for investors and stakeholders to further investigate the reasons behind the observed fluctuations in order to assess the company's financial health and debt repayment ability accurately.