Ichor Holdings Ltd (ICHR)

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	-8,788	-10,895	86,386	80,207	41,018
Interest expense	US$ in thousands	9,266	19,379	11,056	6,451	8,727
Interest coverage		-0.95	-0.56	7.81	12.43	4.70

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $-8,788K ÷ $9,266K
= -0.95

The interest coverage ratio reflects the company's ability to meet its interest expenses with its operating income. A higher interest coverage ratio indicates a better ability to cover interest payments.

For Ichor Holdings Ltd, the interest coverage has shown fluctuations over the years. In December 2020, the interest coverage ratio was 4.70, indicating the company's operating income was able to cover its interest expenses approximately 4.70 times. This ratio improved significantly to 12.43 by December 2021, suggesting a stronger ability to cover interest costs.

However, there was a notable decline in December 2022, with the interest coverage ratio dropping to 7.81. This reduction indicates a decrease in the company's ability to cover interest payments compared to the previous year. The situation worsened in December 2023 and December 2024, with negative interest coverage ratios of -0.56 and -0.95 respectively. A negative interest coverage ratio implies that the company's operating income is insufficient to cover its interest expenses.

Overall, the trend in Ichor Holdings Ltd's interest coverage ratio shows variability over the years, with a sharp decline in recent years potentially indicating financial distress. It is essential for the company to monitor and improve its interest coverage ratio to ensure it can meet its interest obligations effectively in the future.