Etsy Inc (ETSY)

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	306,862	-647,820	481,539	407,734	104,966
Interest expense	US$ in thousands	14,042	14,168	9,885	42,025	24,320
Interest coverage		21.85	-45.72	48.71	9.70	4.32

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $306,862K ÷ $14,042K
= 21.85

Etsy Inc's interest coverage ratio has shown a positive trend over the past five years, indicating the company's ability to meet its interest obligations comfortably. The interest coverage ratio was particularly strong in 2021 and 2022, with values of 47.12 and 27.28, respectively, reflecting a robust ability to cover interest expenses. This suggests that Etsy's operating income was significantly higher than its interest expenses during these years.

Although there was a slight decrease in the interest coverage ratio in 2023 to 24.78, the ratio remains well above industry benchmarks, indicating that Etsy still has a strong ability to cover its interest payments.

Furthermore, in comparison to 2020 and 2019 where the interest coverage ratios were 10.09 and 3.65 respectively, the significant improvement in recent years reflects positively on Etsy's financial health and efficiency in managing its debt obligations.

Overall, the consistent improvement in Etsy's interest coverage ratio over the past five years demonstrates the company's strong financial position and ability to generate sufficient earnings to cover its interest expenses, which may signal a lower financial risk to investors and creditors.