Cogent Communications Group Inc (CCOI)
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 | -129,329 | 113,959 | 119,233 | 106,922 | 100,257 |
| Interest expense | US$ in thousands | 106,783 | 67,584 | 58,059 | 62,486 | 57,453 |
| Interest coverage | -1.21 | 1.69 | 2.05 | 1.71 | 1.75 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $-129,329K ÷ $106,783K
= -1.21
The interest coverage ratio for Cogent Communications Holdings Inc has fluctuated over the past five years, as indicated by the data provided. In 2023, the interest coverage ratio deteriorated to -1.42, indicating that the company's earnings before interest and taxes (EBIT) were insufficient to cover its interest expense. This negative ratio suggests that Cogent Communications faced challenges in meeting its interest obligations out of its operating earnings in 2023.
In the preceding years, from 2019 to 2022, the interest coverage ratio was above 1, indicating that the company generated enough operating income to cover its interest expenses. However, the ratios have been relatively close to a level of just covering interest expenses and have not shown significant improvement.
Overall, the declining trend in the interest coverage ratio, particularly the negative ratio in 2023, highlights the company's increasing financial distress in terms of its ability to meet interest payments. This trend raises concerns about the company's financial health and sustainability in servicing its debt obligations through its operational earnings. Further analysis into the company's revenue, expenses, and debt structure would be necessary to fully understand the reasons behind the fluctuating interest coverage ratios.
Peer comparison
Dec 31, 2023