Alpha and Omega Semiconductor Ltd (AOSL)

Interest coverage

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	-3,756	22,529	102,038	64,076	-13,937
Interest expense	US$ in thousands	—	306	976	2,168	2,783
Interest coverage		—	73.62	104.55	29.56	-5.01

June 30, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $-3,756K ÷ $—K
= —

The interest coverage ratio for Alpha and Omega Semiconductor Ltd has shown varying trends over the past five years. In 2023 and 2022, the company had healthy interest coverage ratios of 73.62 and 104.55 respectively, indicating its ability to comfortably meet its interest obligations. This suggests that the company's operating income was significantly higher compared to its interest expenses during those years.

In 2021, the interest coverage ratio decreased to 29.56, which may raise some concerns as it indicates a lower ability to cover interest expenses with operating income. This could be a sign of increased interest expenses or a decline in operating income during that period.

Notably, in 2020, the interest coverage ratio was negative at -5.01, which signifies that the company's operating income was insufficient to cover its interest expenses. This is a red flag indicating potential financial distress and the need for further investigation into the company's financial health and sustainability.

Overall, while the company demonstrated strong interest coverage ratios in some years, the significant drop in 2021 and the negative coverage in 2020 underscore the importance of monitoring the company's financial performance closely to ensure its ability to meet its debt obligations and sustain its operations.