Illumina Inc (ILMN)
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 | -1,040,000 | -4,179,000 | 945,000 | 905,000 | 1,182,000 |
Interest expense | US$ in thousands | 77,000 | 26,000 | 61,000 | 49,000 | 52,000 |
Interest coverage | -13.51 | -160.73 | 15.49 | 18.47 | 22.73 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $-1,040,000K ÷ $77,000K
= -13.51
The interest coverage ratio provides insight into a company's ability to meet its interest obligations with its operating income. A higher interest coverage ratio indicates a greater ability to cover interest expenses.
Analyzing Illumina Inc's interest coverage over the past five years reveals fluctuations in its ability to cover interest expenses. In 2023, the interest coverage ratio was -11.68, indicating that the company's operating income was insufficient to cover its interest expenses, posing a potential financial risk. This significant decline from the prior year's ratio of 23.60 raises concerns about Illumina's financial health.
In contrast, the interest coverage ratio improved in 2022 to -2.02, although it remained negative, indicating ongoing challenges in meeting interest obligations. The substantial decrease in the ratio from 2021, where it stood at a robust 72.50, suggests a significant deterioration in the company's financial performance.
The absence of data for 2019 limits a comprehensive trend analysis. However, the sharp decline in the interest coverage ratio over the past two years highlights a concerning trend in Illumina's ability to cover interest expenses with its operating income.
Overall, the negative interest coverage ratios in recent years indicate that Illumina Inc may be struggling to generate sufficient operating income to meet its interest obligations, warranting further investigation into the company's financial strategy and operational efficiency.
Peer comparison
Dec 31, 2023