Harmonic Inc (HLIT)
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 | 65,259 | 22,172 | 45,519 | 19,490 | -14,708 |
| Interest expense | US$ in thousands | 7,326 | 2,696 | 5,040 | 10,625 | 11,509 |
| Interest coverage | 8.91 | 8.22 | 9.03 | 1.83 | -1.28 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $65,259K ÷ $7,326K
= 8.91
Interest coverage is an important financial ratio that indicates a company's ability to meet its interest obligations with its operating income. Looking at Harmonic Inc's interest coverage over the past few years, we can observe the following trend:
- As of December 31, 2020, Harmonic Inc had an interest coverage ratio of -1.28, which indicates that the company's operating income was insufficient to cover its interest expenses, implying potential financial distress.
- However, there was a significant improvement in the company's interest coverage ratio as of December 31, 2021, with a ratio of 1.83. While still below the ideal value of 2 or higher, this increase shows that Harmonic Inc's operating income was more capable of covering its interest payments compared to the previous year.
- The trend continued to improve in the following years, with the interest coverage ratios reaching 9.03 as of December 31, 2022, 8.22 as of December 31, 2023, and 8.91 as of December 31, 2024. These ratios indicate a strong ability to meet interest obligations from operating income, suggesting improved financial stability and reduced financial risk.
Overall, the increasing trend in Harmonic Inc's interest coverage ratios from 2020 to 2024 reflects an enhancing financial position and a healthier ability to handle interest expenses.
Peer comparison
Dec 31, 2024