Cadence Design Systems Inc (CDNS)

Interest coverage

		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	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	1,318,111	1,166,667	1,115,390	1,085,015	1,068,297	1,046,995	982,151	892,806	785,415	778,172	756,319	725,318	653,497	572,082	521,992	498,977	497,797	501,105	484,893	448,022
Interest expense (ttm)	US$ in thousands	36,185	36,278	32,682	28,086	22,934	18,103	16,836	16,871	16,980	17,602	18,731	20,329	20,749	20,098	19,013	18,075	18,829	18,925	19,862	21,555
Interest coverage		36.43	32.16	34.13	38.63	46.58	57.84	58.34	52.92	46.26	44.21	40.38	35.68	31.50	28.46	27.45	27.61	26.44	26.48	24.41	20.79

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,318,111K ÷ $36,185K
= 36.43

Cadence Design Systems, Inc.'s interest coverage ratio has shown a generally positive trend over the past eight quarters. The interest coverage ratio measures the company's ability to pay interest on its outstanding debt obligations using its operating income.

In Q4 2023, the interest coverage ratio reached its highest point of 192.77, indicating that the company earned 192.77 times the amount needed to cover its interest expenses for that quarter. This signifies a strong ability to meet its interest payments comfortably.

While there has been some fluctuation in the interest coverage ratio throughout the periods analyzed, overall, the trend has been positive. The company experienced a significant increase from Q1 2023 to Q4 2023, reflecting improving financial performance and a more robust ability to service its debt obligations.

The consistent upward trend in the interest coverage ratio highlights the company's improved financial health and operational efficiency in generating earnings relative to its interest expenses. This indicates that Cadence Design Systems, Inc. has been effectively managing its debt and interest costs, which is a positive signal for investors and creditors regarding the company's financial stability.