InterDigital Inc (IDCC)
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 | 282,443 | 148,691 | 95,888 | 78,952 | 72,874 |
| Interest expense | US$ in thousands | 44,817 | 29,496 | 25,225 | 40,799 | 40,955 |
| Interest coverage | 6.30 | 5.04 | 3.80 | 1.94 | 1.78 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $282,443K ÷ $44,817K
= 6.30
Interdigital Inc's interest coverage ratio has shown an improving trend over the past five years, reflecting the company's ability to cover its interest expenses with operating profits. The ratio has increased from 0.92 in 2019 to 4.94 in 2023. This indicates that the company's earnings before interest and taxes (EBIT) are nearly 5 times its interest expenses in the most recent year.
The upward trend in the interest coverage ratio suggests that Interdigital's financial health has strengthened over the period under review. A higher interest coverage ratio is generally considered favorable as it indicates that the company has sufficient earnings to comfortably meet its interest payments.
The significant improvement in the interest coverage ratio from 2020 to 2023 indicates a positive shift in profitability and operational efficiency. This improving trend may signal a reduced risk of financial distress for Interdigital Inc and a potentially more sustainable financial position. However, it is advisable to monitor this ratio over time to ensure ongoing financial stability and the ability to meet debt obligations.
Peer comparison
Dec 31, 2023