Alpha and Omega Semiconductor Ltd (AOSL)

Interest coverage

		Jun 30, 2024	Mar 31, 2024	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
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	-3,756	355	-3,543	6,376	22,529	38,057	83,691	102,623	102,038	106,261	92,825	78,698	64,076	40,386	13,971	-2,989	-13,937	-8,705	703	4,935
Interest expense (ttm)	US$ in thousands	214	293	309	324	306	511	439	623	976	1,161	1,662	1,963	2,168	2,340	2,513	2,658	2,783	4,132	5,166	6,155
Interest coverage		-17.55	1.21	-11.47	19.68	73.62	74.48	190.64	164.72	104.55	91.53	55.85	40.09	29.56	17.26	5.56	-1.12	-5.01	-2.11	0.14	0.80

June 30, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-3,756K ÷ $214K
= -17.55

Interest coverage ratio indicates a company's ability to meet its interest obligations with available earnings. A higher ratio implies better ability to cover interest expenses.

Alpha and Omega Semiconductor Ltd's interest coverage ratio has varied significantly over the past few quarters. The ratio was negative in some periods, indicating that the company's earnings were insufficient to cover its interest expenses. However, there were also periods with very high interest coverage ratios, indicating strong ability to cover interest payments.

Specifically, the interest coverage ratio was particularly weak in the Jun 30, 2024 and Dec 31, 2023 quarters, at -17.55 and -11.47 respectively, suggesting a significant shortfall in earnings relative to interest expenses in those periods. This could raise concerns about the company's financial health and ability to service its debt obligations.

On the other hand, the interest coverage ratio improved substantially in the Dec 31, 2022 quarter, reaching a very high level of 190.64. This indicates a robust ability to cover interest payments with earnings during that period.

Overall, the company's interest coverage ratio has displayed volatility, with periods of both strong and weak coverage. Investors and stakeholders should closely monitor the company's performance and financial health to assess its ability to meet its interest obligations in the future.