Flex Ltd (FLEX)

Interest coverage

		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	Dec 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	1,037,000	1,116,000	1,174,000	1,281,000	1,254,000	1,203,000	1,184,000	1,146,000	1,076,000	988,000	971,000	1,025,000	1,014,000	952,000	794,000	557,680	463,868	195,328	166,537	122,497
Interest expense (ttm)	US$ in thousands	207,000	203,000	207,000	182,000	189,000	191,000	187,000	176,000	165,000	158,000	154,000	153,000	155,000	156,000	121,100	82,100	42,900	7,300	7,300	45,458
Interest coverage		5.01	5.50	5.67	7.04	6.63	6.30	6.33	6.51	6.52	6.25	6.31	6.70	6.54	6.10	6.56	6.79	10.81	26.76	22.81	2.69

September 30, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,037,000K ÷ $207,000K
= 5.01

Flex Ltd has shown a consistent trend of healthy interest coverage ratios over the past few periods, indicating its ability to comfortably meet its interest obligations. The interest coverage ratio has been relatively stable, averaging around 6.50 to 6.70 for the most recent periods. This suggests that the company's operating income is sufficiently high to cover its interest expenses multiple times over.

It is worth noting that there was a significant increase in the interest coverage ratio in the final quarter of 2019 and the first quarter of 2020, with ratios of 10.81 and 26.76, respectively. These exceptionally high ratios could be attributed to higher operating income relative to interest expenses during those periods.

Overall, Flex Ltd's consistent and strong interest coverage ratios indicate a solid financial position and ability to manage its debt obligations effectively. This stability and strength in interest coverage bode well for the company's financial health and ability to weather potential economic downturns.