ANSYS Inc (ANSS)

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	639,283	598,041	527,759	504,913	526,044
Interest expense	US$ in thousands	47,145	22,726	12,405	10,988	3,461
Interest coverage		13.56	26.32	42.54	45.95	151.99

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $639,283K ÷ $47,145K
= 13.56

Ansys Inc.'s interest coverage ratio has shown a declining trend over the past five years, indicating a decrease in the company's ability to cover its interest expenses with its earnings before interest and taxes (EBIT). The interest coverage ratio was 22.72 in 2023, down from 34.84 in 2022, 49.70 in 2021, and 83.91 in 2020.

Although the ratio is still well above 1, which indicates the company's ability to meet its interest obligations, the decreasing trend raises concerns about the company's future ability to comfortably cover its interest expenses. It suggests a potential increase in financial risk and may point towards a need for the company to manage its debt levels more effectively or improve its operational performance to generate higher EBIT relative to its interest expenses. The absence of data for 2019 makes it challenging to assess the full trajectory of Ansys Inc.'s interest coverage ratio, but the recent trend emphasizes the importance of monitoring the company's financial health closely.