Broadcom Inc (AVGO)

Interest coverage

		Nov 3, 2024	Oct 29, 2023	Oct 30, 2022	Oct 31, 2021	Nov 1, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	13,596,000	16,207,000	14,225,000	8,519,000	4,014,000
Interest expense	US$ in thousands	3,953,000	1,622,000	1,737,000	1,885,000	1,777,000
Interest coverage		3.44	9.99	8.19	4.52	2.26

November 3, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $13,596,000K ÷ $3,953,000K
= 3.44

Broadcom Inc's interest coverage ratio has shown a fluctuating trend over the past five years. The ratio was 3.44 in November 2024, representing a decrease from the preceding year but still indicating that the company's operating income was able to cover its interest expenses 3.44 times. This suggests that the company may have had a tighter ability to cover interest payments in the most recent period compared to the previous years. However, it is important to note that a ratio above 1 indicates that the company's earnings before interest and taxes (EBIT) were sufficient to cover its interest expenses.

In October 2023, the interest coverage ratio was notably higher at 9.99, showcasing a strong ability to cover interest payments with operating income. This was a significant improvement from the previous year and suggested a healthier financial position for the company during that period.

Similarly, in October 2022, the interest coverage ratio was 8.19, displaying a strong ability to cover interest expenses with operating income. This further solidified the company's financial stability and ability to meet its debt obligations.

Looking back to October 2021, the interest coverage ratio stood at 4.52, indicating a moderate ability to cover interest payments with operating income. While this ratio was lower compared to the previous year, it still suggested that Broadcom Inc had a comfortable margin to meet its interest obligations.

In October 2020, the interest coverage ratio was the lowest at 2.26, signaling a decrease in the company's ability to cover interest expenses with its operating income. This might have raised concerns about the company's financial health and its ability to manage its debt effectively during that period.

Overall, while the interest coverage ratio of Broadcom Inc has fluctuated over the past five years, it is essential for investors and stakeholders to monitor this metric closely to assess the company's ability to meet its interest obligations and manage its debt levels effectively.