Ichor Holdings Ltd (ICHR)

Interest coverage

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Earnings before interest and tax (EBIT)	US$ in thousands	-11,699	86,386	80,207	41,018	14,922
Interest expense	US$ in thousands	19,379	11,056	6,451	8,727	10,647
Interest coverage		-0.60	7.81	12.43	4.70	1.40

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $-11,699K ÷ $19,379K
= -0.60

Ichor Holdings Ltd's interest coverage ratio has exhibited significant fluctuations over the past five years. In 2023, the interest coverage ratio was negative at -0.60, indicating that the company's earnings were insufficient to cover its interest expenses. This suggests a concerning financial position where the company's ability to meet interest obligations may be in jeopardy.

In 2022, the interest coverage ratio improved to 7.81, reflecting a more stable financial situation where the company's earnings were nearly eight times its interest expenses. This is a positive sign of improved financial health.

The interest coverage ratio further strengthened in 2021 to 12.43, indicating a healthy ability to cover interest payments with operating earnings. This demonstrates a robust financial position and lower risk of default on debt obligations.

In 2020, the interest coverage ratio decreased to 4.70, signaling a slight decline in the company's ability to cover interest expenses with its operating income compared to the previous year.

The lowest point in the past five years was in 2019, with an interest coverage ratio of 1.40, highlighting a precarious financial position where the company's earnings were only 1.4 times its interest expenses.

Overall, the trend in interest coverage for Ichor Holdings Ltd shows fluctuations, with periods of both strength and weakness in its ability to meet interest obligations. It is essential for the company to strive for consistent improvements in its interest coverage ratio to ensure financial stability and mitigate the risk of default on debt payments.