Littelfuse Inc (LFUS)
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 | 190,580 | 360,862 | 469,160 | 359,552 | 182,330 |
| Interest expense | US$ in thousands | 38,717 | 39,866 | 26,216 | 18,527 | 21,077 |
| Interest coverage | 4.92 | 9.05 | 17.90 | 19.41 | 8.65 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $190,580K ÷ $38,717K
= 4.92
Interest coverage is a key financial ratio that measures a company's ability to cover its interest payments on outstanding debt with its operating income. A higher interest coverage ratio indicates a company's stronger ability to meet its interest obligations.
Based on the provided data for Littelfuse Inc, the interest coverage ratio has exhibited fluctuations over the years. As of December 31, 2020, the interest coverage ratio stood at 8.65, indicating that the company's operating income was able to cover its interest expenses approximately 8.65 times.
Subsequently, there was a notable improvement in the interest coverage ratio as of December 31, 2021, and December 31, 2022, with ratios of 19.41 and 17.90, respectively. This significant increase suggests that Littelfuse Inc experienced enhanced profitability and cash flow, which enhanced its capacity to comfortably meet its interest obligations.
However, the interest coverage ratio decreased to 9.05 as of December 31, 2023, and further dropped to 4.92 as of December 31, 2024. These declining ratios may raise concerns regarding the company's ability to cover its interest payments adequately.
Overall, while Littelfuse Inc demonstrated a strong ability to cover its interest expenses in some years, the fluctuations in the interest coverage ratio over the years highlight the importance of monitoring the company's financial performance and debt management strategies to ensure sustainable financial health.
Peer comparison
Dec 31, 2024