FormFactor Inc (FORM)

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	82,756	-13,853	-10,783	24,026	58,449	106,143	123,798	110,605	99,102	88,375	87,528	90,026	86,039	89,234	76,934	63,892	52,978	40,472	40,045	41,972
Interest expense (ttm)	US$ in thousands	2,758	2,874	3,026	1,663	579	618	617	614	602	629	671	726	864	1,058	1,287	1,638	1,915	2,199	2,554	2,942
Interest coverage		30.01	-4.82	-3.56	14.45	100.95	171.75	200.65	180.14	164.62	140.50	130.44	124.00	99.58	84.34	59.78	39.01	27.66	18.40	15.68	14.27

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $82,756K ÷ $2,758K
= 30.01

FormFactor Inc's interest coverage ratio fluctuated significantly over the past several quarters. The company had an impressive interest coverage ratio of 30.01 in December 2023, indicating that it generated substantial earnings relative to its interest expenses. However, in the preceding quarter, in September 2023, the interest coverage ratio turned negative at -4.82, which suggests that the company's earnings were insufficient to cover its interest costs. This negative trend continued into the next quarter, June 2023, with an interest coverage ratio of -3.56.

FormFactor Inc's interest coverage ratio improved significantly in March 2023, reaching 14.45, a more sustainable level compared to the negative ratios in the previous quarters. The company's performance further improved in December 2022, where it achieved a high interest coverage ratio of 100.95, indicating strong earnings relative to interest expenses.

Throughout the earlier quarters in 2022 and 2021, FormFactor Inc maintained robust interest coverage ratios, well above 100, indicating a comfortable ability to meet its interest obligations. However, there was a gradual decline in the interest coverage ratio from September 2021 to March 2020.

It is essential for FormFactor Inc to closely monitor and manage its interest coverage ratio to ensure it remains at a healthy level, as fluctuations and negative ratios can indicate potential financial distress or liquidity challenges in meeting debt obligations.