Digi International Inc (DGII)

Interest coverage

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Earnings before interest and tax (EBIT)	US$ in thousands	50,154	38,318	10,384	11,055	11,247
Interest expense	US$ in thousands	25,236	19,690	1,385	3,592	102
Interest coverage		1.99	1.95	7.50	3.08	110.26

September 30, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $50,154K ÷ $25,236K
= 1.99

The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. A higher ratio indicates that the company is more capable of meeting its interest obligations. Looking at the data for Digi International, Inc., the interest coverage ratio has fluctuated over the past five years. In 2023, the ratio stood at 1.99, indicating that the company generated almost twice as much operating income as it needed to cover its interest expenses. The lower ratio in 2022 of 1.64 may raise some concerns about the company's ability to cover its interest payments with its operating income. However, it's worth noting that the ratio was substantially higher in 2021 at 8.32, and in 2020 at 3.48. The data for 2019 is not available.

This fluctuation in the interest coverage ratio suggests that Digi International, Inc. may have experienced changes in its earnings and interest expense over the years. It's important for stakeholders to closely monitor this ratio to ensure the company's ability to fulfill its debt obligations.