Gogo Inc (GOGO)
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 | 56,565 | 124,165 | 144,589 | 36,831 | 76,351 |
| Interest expense | US$ in thousands | 56,846 | 33,056 | 38,872 | 67,472 | 125,787 |
| Interest coverage | 1.00 | 3.76 | 3.72 | 0.55 | 0.61 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $56,565K ÷ $56,846K
= 1.00
The interest coverage ratio reflects Gogo Inc's ability to meet its interest obligations through its earnings. Analyzing the data provided, we observe that Gogo Inc's interest coverage has fluctuated over the years.
As of December 31, 2020, the interest coverage ratio was 0.61, indicating that the company's earnings were insufficient to cover its interest expenses, raising concerns about its financial health.
By December 31, 2021, the interest coverage ratio decreased further to 0.55, signaling a worsening financial condition with a higher risk of defaulting on interest payments.
However, there was a significant improvement in the interest coverage ratio by December 31, 2022, and 2023, where the ratios stood at 3.72 and 3.76 respectively. This suggests that Gogo Inc's earnings were more than sufficient to cover its interest expenses during these periods, indicating a more stable financial position.
By December 31, 2024, the interest coverage ratio dropped to 1.00, which may raise concerns as it indicates that the company's earnings barely cover its interest payments, leaving little room for financial flexibility.
In conclusion, while Gogo Inc showed improvements in its interest coverage ratio in the later years, the fluctuating nature of the ratio suggests the company may face challenges in meeting its interest obligations in the future if its financial performance remains inconsistent.
Peer comparison
Dec 31, 2024