Duolingo Inc (DUOL)

Interest coverage

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021
Earnings before interest and tax (EBIT)	US$ in thousands	-13,259	-65,195	-60,007
Interest expense	US$ in thousands	—	7,235	49
Interest coverage		—	-9.01	-1,224.63

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $-13,259K ÷ $—K
= —

The interest coverage ratio for Duolingo Inc has shown a significant improvement over the last three years. In 2021, the interest coverage ratio was reported as -1,224.63, indicating that the company's earnings before interest and taxes (EBIT) were significantly lower than its interest expenses, reflecting a highly unfavorable financial position in terms of debt repayment capacity.

However, this negative trend reversed dramatically in the subsequent years. By the end of 2022, the interest coverage ratio improved to -9.01, suggesting that the company's EBIT was still insufficient to cover its interest obligations but to a much lesser extent compared to the previous year.

Notably, in 2023, the interest coverage ratio was not reported, indicating that it may have surpassed 0 or reached a positive value. This could signify a considerable enhancement in the company's ability to cover its interest expenses with its operating income, demonstrating a healthier financial position and reduced financial risk in terms of debt repayment.

Overall, the improvement in the interest coverage ratio from a highly negative figure to potentially positive levels over the three-year period reflects a positive trajectory in Duolingo Inc's financial health and its ability to meet its interest payment obligations.