Iridium Communications Inc (IRDM)
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 | 139,735 | 3,864 | 76,679 | 46,314 | 35,483 |
| Interest expense | US$ in thousands | 14,700 | 14,700 | 72,090 | 72,816 | 98,600 |
| Interest coverage | 9.51 | 0.26 | 1.06 | 0.64 | 0.36 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $139,735K ÷ $14,700K
= 9.51
The interest coverage ratio for Iridium Communications Inc has shown a mixed performance over the years.
As of December 31, 2020, the interest coverage ratio was significantly low at 0.36, indicating that the company's operating income was only able to cover 36% of its interest expenses. This suggests a potential financial risk, as the company may struggle to meet its interest obligations.
There was a slight improvement in the interest coverage ratio by the end of December 31, 2021, reaching 0.64. While this shows some progress, the ratio is still below 1, implying that the company's earnings are not yet sufficient to cover its interest costs comfortably.
By December 31, 2022, the interest coverage ratio improved further to 1.06, indicating that the company was able to cover its interest expenses with its operating income. This is a positive sign as it suggests a better ability to meet interest obligations and reduce financial risk.
However, the ratio dropped significantly by December 31, 2023, to 0.26, signaling a potential concern as the company's operating income was insufficient to cover its interest payments. This could indicate financial stress or operational challenges during that period.
The financial performance significantly improved by December 31, 2024, with a notably high interest coverage ratio of 9.51. This indicates that the company's operating income was more than sufficient to cover its interest expenses, reflecting a strong financial position and reduced risk of default.
Overall, the trend in Iridium Communications Inc's interest coverage ratio shows variability over the years, with periods of low coverage raising concerns, but also instances of improvement and strong financial health. It is essential for the company to maintain a healthy interest coverage ratio to ensure its ability to meet debt obligations and sustain long-term financial stability.
Peer comparison
Dec 31, 2024