Inspire Medical Systems Inc (INSP)
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 | 36,083 | -19,906 | -42,591 | -39,842 | -54,971 |
| Interest expense | US$ in thousands | 22 | 0 | 1,677 | 2,128 | 2,117 |
| Interest coverage | 1,640.14 | — | -25.40 | -18.72 | -25.97 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $36,083K ÷ $22K
= 1,640.14
The interest coverage ratio measures a company's ability to pay interest on its outstanding debt obligations, with higher values indicating a stronger financial position.
Analyzing the interest coverage ratios of Inspire Medical Systems Inc over the years, we observe a concerning trend. The company's interest coverage ratio was significantly negative in December 31, 2020, at -25.97, and continued to show weaknesses in the following years, with values of -18.72 in December 31, 2021, and -25.40 in December 31, 2022.
The negative values suggest that the company may be facing challenges in generating sufficient earnings to cover its interest expenses. It indicates a potential risk to the company's financial health, as a consistent inability to cover interest payments could lead to liquidity issues or even defaulting on its debt obligations.
However, there was a drastic improvement in the interest coverage ratio in December 31, 2024, soaring to 1,640.14. This sharp increase indicates a significant improvement in the company's ability to cover its interest costs, signaling a positive turn in its financial position compared to the previous years.
In conclusion, the recent surge in the interest coverage ratio for Inspire Medical Systems Inc in December 31, 2024, is a positive sign of enhanced financial stability. However, the company needs to continue monitoring and managing its interest coverage ratio to ensure long-term financial sustainability.
Peer comparison
Dec 31, 2024