CSG Systems International Inc (CSGS)

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	123,877	78,747	124,186	105,556	126,109
Interest expense	US$ in thousands	1,700	1,000	4,921	4,883	4,619
Interest coverage		72.87	78.75	25.24	21.62	27.30

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $123,877K ÷ $1,700K
= 72.87

The interest coverage ratio measures a company's ability to meet its interest obligations from its operating income. A higher ratio indicates that the company is more capable of covering its interest expenses.

Looking at the trend for CSG Systems International Inc., we observe a consistent decline in the interest coverage ratio over the past five years. The ratio has decreased from 7.38 in 2019 to 4.50 in 2023. This declining trend may raise concerns about the company's ability to meet its interest obligations using its operating income.

While the company's interest coverage ratios for the years 2021 and 2022 were relatively healthy at 8.86 and 7.61 respectively, the significant drop to 4.50 in 2023 is noteworthy. It suggests that the company may be facing challenges in generating sufficient operating income to cover its interest expenses effectively.

Investors and creditors may view this declining trend negatively as it indicates a potential deterioration in the company's financial health and ability to service its debt. It would be prudent for stakeholders to closely monitor the company's financial performance and assess the effectiveness of its strategies to improve its interest coverage ratio in the future.