First Solar Inc (FSLR)

Interest coverage

		Dec 31, 2024	Sep 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	1,427,246	1,264,676	1,132,563	904,255	517,067	164,179	117,133	20,823	193,958	301,645	266,223	585,269	467,894	623,015	565,976	315,097	175,551	22,065	-26,197	-93,347
Interest expense (ttm)	US$ in thousands	36,173	29,020	21,427	12,965	9,030	8,287	10,108	12,225	11,622	11,589	12,976	13,107	13,595	21,612	20,243	24,036	24,066	18,067	23,734	27,066
Interest coverage		39.46	43.58	52.86	69.75	57.26	19.81	11.59	1.70	16.69	26.03	20.52	44.65	34.42	28.83	27.96	13.11	7.29	1.22	-1.10	-3.45

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,427,246K ÷ $36,173K
= 39.46

First Solar Inc's interest coverage ratio has shown significant fluctuations over the periods provided. The interest coverage ratio is calculated by dividing Earnings Before Interest and Taxes (EBIT) by interest expense. A ratio below 1 indicates that the company is not generating enough earnings to cover its interest payments.

First Solar Inc had negative interest coverage ratios in the periods ending December 31, 2019, and March 31, 2020, indicating that the company was not generating enough earnings to cover its interest expenses during those periods. This is a concerning sign as it may indicate financial distress.

The interest coverage ratio started improving from June 30, 2020, and saw a significant turnaround by December 31, 2020, when it reached 13.11. This improvement continued into 2021, with ratios consistently increasing and reaching a peak of 69.75 by December 31, 2023. This significant improvement indicates that the company's earnings were sufficient to cover its interest expenses multiple times over during these periods.

However, the interest coverage ratio started to decline from the peak reached in December 2023, dropping to 39.46 by December 31, 2024. While still at a healthy level, this downward trend may warrant monitoring to ensure that the company continues to generate enough earnings to cover its interest obligations in the future.

Overall, the trend in First Solar Inc's interest coverage ratio shows a mixed performance, with periods of financial strain followed by significant improvement. Monitoring this ratio is crucial to assess the company's ability to meet its debt obligations and ensure financial stability.