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.