Dropbox Inc (DBX)

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	486,300	508,300	511,200	442,900	383,500	355,600	318,200	351,100	356,500	362,800	346,800	339,600	309,900	273,100	225,800	154,200	121,200	63,000	14,400	-32,400
Interest expense (ttm)	US$ in thousands	1,900	4,200	9,200	12,900	16,800	16,100	12,800	9,600	7,100	5,000	5,000	5,400	5,200	4,700	3,100	2,300	3,500	15,100	17,700	20,300
Interest coverage		255.95	121.02	55.57	34.33	22.83	22.09	24.86	36.57	50.21	72.56	69.36	62.89	59.60	58.11	72.84	67.04	34.63	4.17	0.81	-1.60

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $486,300K ÷ $1,900K
= 255.95

Dropbox Inc's interest coverage ratio has shown significant fluctuations over the past few years. The interest coverage ratio is a measure of a company's ability to meet its debt obligations. A higher ratio indicates a stronger ability to cover interest expenses with operating income.

Based on the provided data, Dropbox's interest coverage ratio stood at -1.60 as of March 31, 2020, which indicates that the company's operating income was not sufficient to cover its interest expenses during that period. However, the ratio improved to 0.81 by June 30, 2020, but was still below 1, indicating a continued struggle to cover interest payments.

The trend saw a positive turn as the interest coverage ratio increased significantly to 4.17 by September 30, 2020, and continued to improve over the following quarters, reaching 255.95 by December 31, 2024. This indicates a substantial improvement in Dropbox's ability to cover its interest expenses with operating income.

However, it should be noted that the interest coverage ratio experienced fluctuations throughout the period, indicating potential variations in the company's financial performance and debt servicing capabilities. Investors and creditors should closely monitor Dropbox's interest coverage ratio to assess its ability to meet debt obligations and manage financial risks effectively.