Masimo Corporation (MASI)
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 | 138,400 | 210,000 | 274,739 | 264,002 | 234,494 |
| Interest expense | US$ in thousands | 50,300 | 25,700 | 300 | 300 | 328 |
| Interest coverage | 2.75 | 8.17 | 915.80 | 880.01 | 714.92 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $138,400K ÷ $50,300K
= 2.75
Masimo Corporation's interest coverage ratio has shown fluctuations over the past five years. The interest coverage ratio, which indicates the company's ability to pay interest expenses on its outstanding debt, was 2.75 in 2023, a decrease from 8.17 in 2022.
The significant drop in the interest coverage ratio from 2022 to 2023 may raise concerns about Masimo Corporation's ability to meet its interest obligations from its operating income. However, it is important to note that the interest coverage ratio was exceptionally high in 2021, 2020, and 2019, indicating a very strong ability to cover interest expenses with operating income in those years.
The drastic fluctuations in the interest coverage ratio should prompt further investigation into what caused the sharp changes in the company's ability to meet its interest obligations. It may be beneficial for stakeholders to analyze the company's financial management practices and future cash flow projections to assess the sustainability of Masimo Corporation's ability to cover its interest expenses.
Peer comparison
Dec 31, 2023