Enphase Energy Inc (ENPH)

Interest coverage

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	97,090	56,776	146,529	331,543	521,973	677,901	674,827	582,390	461,404	354,216	256,086	220,562	166,082	180,105	192,606	85,851	140,411	109,882	92,701	153,164
Interest expense (ttm)	US$ in thousands	8,905	8,921	8,880	8,879	8,839	8,850	8,909	8,858	9,438	19,848	30,221	40,559	45,152	38,364	31,729	25,175	21,001	17,403	13,696	9,095
Interest coverage		10.90	6.36	16.50	37.34	59.05	76.60	75.75	65.75	48.89	17.85	8.47	5.44	3.68	4.69	6.07	3.41	6.69	6.31	6.77	16.84

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $97,090K ÷ $8,905K
= 10.90

Interest coverage is a financial ratio that measures a company's ability to cover its interest expenses with its operating income. A higher interest coverage ratio indicates that the company is more capable of meeting its interest obligations.

For Enphase Energy Inc, we can observe fluctuations in the interest coverage ratio over the specified time period. The ratio was relatively strong in the range of 6 to 16 from March 2020 to June 2021, suggesting the company had comfortable earnings to cover its interest payments.

However, there was a noticeable decline in the interest coverage ratio in the following quarters, hitting a low of 3.41 in March 2021, which could indicate potential challenges in meeting interest expenses with operating income during that period.

From June 2021 onward, the interest coverage ratio improved gradually, reaching a peak of 76.60 in September 2023. This substantial increase indicates a significant improvement in the company's ability to cover its interest obligations with its operating income.

The ratio then declined in the subsequent periods but remained above 10, indicating satisfactory interest coverage levels. Overall, Enphase Energy Inc's interest coverage ratio showed variability but generally demonstrated a positive trend, with periods of both strength and weakness in meeting interest payments with operating income.