First Solar Inc (FSLR)

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	1,394,420	904,255	20,823	585,269	315,097
Interest expense	US$ in thousands	38,870	12,965	12,225	13,107	24,036
Interest coverage		35.87	69.75	1.70	44.65	13.11

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $1,394,420K ÷ $38,870K
= 35.87

First Solar Inc's interest coverage ratio has shown significant fluctuations over the years. In 2020, the company's interest coverage was 13.11, indicating that it was able to cover its interest expenses approximately 13 times. This ratio improved significantly to 44.65 in 2021, demonstrating a strong ability to meet its interest obligations.

However, in 2022, First Solar's interest coverage ratio dropped to 1.70, raising concerns about its ability to cover interest expenses with its operating income. The substantial decrease in this ratio may suggest potential financial strain or increased debt levels within the company.

In 2023, the interest coverage ratio recovered significantly to 69.75, showing a robust improvement in the company's ability to pay interest on outstanding debt. This substantial increase indicates a strong improvement in the company's financial position and ability to service its debt obligations.

By 2024, the interest coverage ratio stood at 35.87, reflecting a healthy ability to cover interest expenses with operating income, although lower compared to the peak in 2023. Overall, it is essential for investors and stakeholders to monitor First Solar Inc's interest coverage ratio closely to assess its financial health and debt management practices.