CTS Corporation (CTS)

Interest coverage

Dec 31, 2024 Sep 30, 2024 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
Earnings before interest and tax (EBIT) (ttm) US$ in thousands 78,094 78,490 75,621 76,814 84,040 86,743 90,620 93,610 97,080 90,431 -24,277 -47,808 -58,059 -55,260 47,870 53,861 45,307 41,741 40,334 52,285
Interest expense (ttm) US$ in thousands 4,235 3,763 3,453 3,438 3,331 3,211 2,556 2,340 2,192 2,024 2,196 2,102 2,111 2,232 2,575 2,976 3,272 3,520 3,475 3,033
Interest coverage 18.44 20.86 21.90 22.34 25.23 27.01 35.45 40.00 44.29 44.68 -11.06 -22.74 -27.50 -24.76 18.59 18.10 13.85 11.86 11.61 17.24

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $78,094K ÷ $4,235K
= 18.44

Interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. A higher interest coverage ratio indicates that the company is more capable of meeting its interest obligations.

Analyzing the trend of CTS Corporation's interest coverage from March 2020 to December 2024, we observe fluctuations in the ratio. The interest coverage ratio started at a healthy level of 17.24 in March 2020, indicating a strong ability to cover interest expenses. However, it decreased gradually over the next few quarters, reaching a low point of -27.50 in December 2021 and further worsening to -22.74 by March 2022.

From September 2022 onwards, there was a significant improvement in the interest coverage ratio, turning positive and showing a strong positive trend. The ratio surged to 44.29 by December 2022, indicating a substantial increase in the company's ability to cover interest payments. This positive momentum continued through the following quarters, with the interest coverage ratio remaining above 20, reflecting a healthy financial position.

Overall, CTS Corporation's interest coverage ratio displayed volatility in the past, experiencing both lows and highs. However, the recent trend shows a positive turnaround, with the company significantly improving its ability to cover interest expenses, which bodes well for its financial stability. It is essential for investors and stakeholders to monitor these fluctuations in the interest coverage ratio to assess the company's financial health and risk profile.