Healthcare Services Group Inc (HCSG)
Interest coverage
| Dec 31, 2024 | Sep 30, 2024 | Jun 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 59,379 | 76,495 | 51,320 | 64,915 | 59,511 | 47,705 | 54,316 | 49,686 | 48,070 | 28,464 | 39,122 | 45,820 | 62,840 | 96,325 | 121,321 | 136,720 | 130,560 | 122,139 | 109,149 | 102,757 |
| Interest expense (ttm) | US$ in thousands | 6,438 | 7,318 | 7,902 | 8,101 | 7,856 | 7,033 | 5,700 | 4,230 | 2,988 | 2,121 | 1,651 | 1,536 | 1,385 | 1,329 | 1,314 | 1,364 | 1,374 | 1,942 | 2,368 | 2,771 |
| Interest coverage | 9.22 | 10.45 | 6.49 | 8.01 | 7.58 | 6.78 | 9.53 | 11.75 | 16.09 | 13.42 | 23.70 | 29.83 | 45.37 | 72.48 | 92.33 | 100.23 | 95.02 | 62.89 | 46.09 | 37.08 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $59,379K ÷ $6,438K
= 9.22
Interest coverage ratio is a financial metric that indicates a company's ability to pay interest expenses on its outstanding debt. It is calculated by dividing a company's earnings before interest and taxes (EBIT) by its interest expenses. A higher interest coverage ratio implies that the company is more capable of meeting its interest obligations.
Based on the data provided for Healthcare Services Group Inc, we observe fluctuations in the interest coverage ratio over the specified periods. The interest coverage ratio was relatively high, starting at 37.08 on March 31, 2020, and peaking at 100.23 on March 31, 2021. This suggests that the company had a strong ability to cover its interest expenses during these periods.
However, there was a notable decrease in the interest coverage ratio in subsequent periods, dropping to 6.78 on September 30, 2023. This decline indicates a potential strain on the company's ability to cover its interest costs efficiently. While there was a slight recovery in the ratio in the following quarters, it remained relatively lower compared to previous years.
It is essential for investors and stakeholders to closely monitor the interest coverage ratio of Healthcare Services Group Inc to assess its financial health and ability to service its debt obligations. The declining trend in the interest coverage ratio may raise concerns about the company's financial stability and warrant further analysis of its debt management strategies.