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.