Diodes Incorporated (DIOD)
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 | 280,167 | 396,288 | 315,061 | 130,862 | 205,274 |
| Interest expense | US$ in thousands | 5,700 | 8,320 | 7,491 | 11,662 | 7,893 |
| Interest coverage | 49.15 | 47.63 | 42.06 | 11.22 | 26.01 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $280,167K ÷ $5,700K
= 49.15
The interest coverage ratio indicates the company's ability to meet its interest obligations with its operating income. A higher ratio suggests that the company is more capable of servicing its debt.
Looking at the trend in Diodes, Inc.'s interest coverage ratio over the past five years, there appears to be fluctuations. The ratio significantly increased from 12.69 in 2020 to 63.47 in 2021, indicating a substantial improvement in the company's ability to cover its interest expenses. This was followed by a further increase to 87.04 in 2022, reflecting continued strength in the company's interest coverage.
However, the absence of the interest coverage ratio for the most recent year, 2023, in the provided data limits a full analysis of the company's current financial health. It is important to note that a consistent increase in the interest coverage ratio is generally seen as a positive sign, indicating a healthier financial position and reduced risk of insolvency due to debt obligations. It would be beneficial to assess the 2023 ratio when available to determine if the positive trend has been sustained.
Peer comparison
Dec 31, 2023