ANSYS Inc (ANSS)

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	765,887	639,283	598,041	527,759	504,913
Interest expense	US$ in thousands	47,849	47,145	22,726	12,405	10,988
Interest coverage		16.01	13.56	26.32	42.54	45.95

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $765,887K ÷ $47,849K
= 16.01

Interest coverage ratio is a key financial metric used to evaluate a company's ability to meet its interest obligations with its operating income. ANSYS Inc's interest coverage ratios from December 31, 2020, to December 31, 2024, show a decreasing trend.

On December 31, 2020, ANSYS had an interest coverage ratio of 45.95, indicating a strong ability to cover its interest expenses. However, this ratio decreased to 42.54 on December 31, 2021, and further dropped to 26.32 by December 31, 2022. This decline suggests that ANSYS may be facing challenges in meeting its interest obligations from its operating income.

Further decline in the interest coverage ratio is seen on December 31, 2023, where the ratio stands at 13.56. This sharp decrease raises concerns about ANSYS's ability to comfortably cover its interest costs. However, there is a slight improvement in the ratio to 16.01 on December 31, 2024, but it still remains at a lower level compared to the previous years.

Overall, the decreasing trend in ANSYS Inc's interest coverage ratio over the years points to a potential risk of financial stress, indicating that the company may have difficulties in servicing its interest payments with its operating income. Investors and creditors may closely monitor this trend to assess ANSYS's financial stability and ability to manage its debt obligations.