DigitalOcean Holdings Inc (DOCN)
Interest coverage
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 35,721 | -14,730 | -14,457 |
| Interest expense | US$ in thousands | 8,945 | 8,396 | 3,744 |
| Interest coverage | 3.99 | -1.75 | -3.86 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $35,721K ÷ $8,945K
= 3.99
DigitalOcean Holdings Inc's interest coverage ratio has shown considerable improvement over the last three years. In 2021, the company had a negative interest coverage ratio of -3.86, indicating that its operating income was insufficient to cover its interest expenses. However, by the end of 2022, there was a significant improvement with the interest coverage ratio standing at -1.75, which suggests that the company was still struggling to meet its interest obligations.
The most recent data for 2023 reflects a notable positive shift, with the interest coverage ratio reaching a healthy level of 3.99. This improvement indicates that DigitalOcean's operating income is now nearly four times its interest expenses, showcasing a strengthened ability to meet its interest payments from its earnings.
Overall, the trend in interest coverage ratio for DigitalOcean Holdings Inc highlights a positive turnaround in the company's financial health and ability to manage its debt obligations more effectively in recent years.
Peer comparison
Dec 31, 2023