Etsy Inc (ETSY)

Interest coverage

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	380,208	306,862	-647,820	481,539	407,734
Interest expense	US$ in thousands	13,806	14,042	14,168	9,885	42,025
Interest coverage		27.54	21.85	-45.72	48.71	9.70

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $380,208K ÷ $13,806K
= 27.54

Etsy Inc's interest coverage ratio provides insights into the company's ability to cover its interest expenses with its earnings.

As of December 31, 2020, the interest coverage ratio was 9.70, indicating that Etsy generated earnings nearly 10 times larger than its interest expenses, demonstrating a healthy financial position in terms of servicing debt obligations.

By December 31, 2021, the interest coverage ratio improved significantly to 48.71, indicating a substantial increase in earnings relative to interest expenses. This suggests a strong ability to meet interest payments comfortably.

However, on December 31, 2022, the interest coverage ratio showed a negative value of -45.72. A negative ratio implies that the company's earnings were insufficient to cover its interest expenses, raising concerns about its financial stability and ability to meet debt obligations.

By December 31, 2023, the interest coverage ratio recovered to 21.85, indicating an improvement in the company's ability to cover its interest expenses with earnings.

Lastly, by December 31, 2024, the interest coverage ratio further improved to 27.54, showing continued strength in the company's ability to service its debt obligations.

Overall, while there were fluctuations in the interest coverage ratio over the analyzed period, Etsy Inc showed resilience in managing its interest expenses and generating sufficient earnings to cover its financial commitments. It is important for investors and stakeholders to monitor this ratio consistently to assess the company's financial health and ability to meet its debt obligations.