Etsy Inc (ETSY)

Interest coverage

		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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	279,841	303,727	-739,609	-664,676	-658,560	-649,992	391,366	406,441	481,539	498,351	512,781	547,487	407,734	275,673	189,831	88,536	104,966	101,333	106,898	96,601
Interest expense (ttm)	US$ in thousands	3,072	17,240	2,101,520	2,102,121	2,100,721	2,090,092	8,591	9,872	9,885	17,763	25,599	33,743	42,025	40,520	34,982	29,634	24,320	20,562	21,620	23,067
Interest coverage		91.09	17.62	-0.35	-0.32	-0.31	-0.31	45.56	41.17	48.71	28.06	20.03	16.23	9.70	6.80	5.43	2.99	4.32	4.93	4.94	4.19

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $279,841K ÷ $3,072K
= 91.09

Interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. For Etsy Inc, the interest coverage ratio has been consistent and relatively high over the past eight quarters, indicating a strong ability to meet its interest obligations.

In Q4 2023, the interest coverage ratio was 24.78, showing that the company earned almost 25 times the amount needed to cover its interest expenses. This suggests that Etsy's operating income is healthy and sufficient to comfortably cover its interest payments.

Looking at the trend over the past quarters, the interest coverage ratio has been above 20, indicating a consistently strong ability to service its debt. In Q2 and Q3 2022, there was a significant drop in the ratio to around 60 and 48, respectively, but it rebounded strongly in subsequent quarters. This may have been due to one-off factors or temporary fluctuations in the company's financials.

Overall, Etsy's interest coverage ratio reflects a financially sound position, demonstrating the company's capacity to manage its debt obligations effectively and remain resilient to changes in interest rates or operating performance.