Garmin Ltd (GRMN)

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	1,092,160	1,018,880	987,884	996,269	1,027,843	1,075,789	1,119,086	1,197,518	1,218,621	1,274,768	1,309,199	1,126,416	1,054,239	959,495	903,854	971,686	945,587	891,737	826,236	787,523
Interest expense (ttm)	US$ in thousands	-32,478	-18,172	-7,700	795	40,826	33,525	29,950	28,473	28,572	28,311	29,191	32,628	37,002	43,327	47,859	51,139	52,817	54,585	53,365	50,625
Interest coverage		—	—	—	1,253.17	25.18	32.09	37.37	42.06	42.65	45.03	44.85	34.52	28.49	22.15	18.89	19.00	17.90	16.34	15.48	15.56

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,092,160K ÷ $-32,478K
= —

Interest coverage is a financial ratio that indicates a company's ability to pay interest expenses on its outstanding debt. A higher interest coverage ratio signifies a stronger ability to meet interest obligations.

Based on the data provided for Garmin Ltd, the interest coverage ratio has fluctuated over the past few quarters. The interest coverage was extremely high at 1,253.17 in March 2023, indicating a substantial earnings buffer to cover interest expenses. This could be a temporary spike due to specific factors impacting that quarter.

In the previous quarters, the interest coverage ratios were more within a reasonable range, ranging from 15.48 to 45.03. This suggests that Garmin Ltd has generally maintained a healthy ability to cover its interest expenses, with the ratios consistently above 1, indicating that the company's earnings were more than sufficient to cover its interest obligations.

It is important to note that a very high interest coverage ratio may also indicate a lower utilization of debt for financing, as the company may have significant cash reserves or low debt levels. Conversely, a very low ratio could imply potential financial distress, as the company may struggle to meet its interest payments.

Overall, Garmin Ltd has demonstrated a varying but generally healthy ability to cover its interest expenses, with the ratio fluctuating over the quarters but staying above 1. This indicates a level of financial stability in managing its debt obligations.