Masimo Corporation (MASI)

Interest coverage

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Earnings before interest and tax (EBIT) (ttm) US$ in thousands -263,800 132,200 128,900 137,200 138,400 174,800 209,700 204,200 225,300 228,858 234,729 268,964 274,767 264,625 258,193 256,566 264,003 261,741 255,039 246,944
Interest expense (ttm) US$ in thousands 1,900 15,200 27,500 50,400 50,300 47,900 44,800 37,500 25,700 14,400 4,700 300 284 234 318 301 301 336 334 331
Interest coverage -138.84 8.70 4.69 2.72 2.75 3.65 4.68 5.45 8.77 15.89 49.94 896.55 967.49 1,130.88 811.93 852.38 877.09 778.99 763.59 746.05

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-263,800K ÷ $1,900K
= -138.84

The interest coverage ratio of Masimo Corporation has shown a fluctuating trend over the past few years. The ratio has been consistently high, indicating a strong ability of the company to meet its interest obligations through its operating income.

The interest coverage ratio peaked at a very high level in September 2021, indicating a significant cushion for the company to cover its interest expenses. However, the ratio declined significantly in the following quarters, dropping to very low levels by June 2022 and turning negative by December 2024. A negative interest coverage ratio indicates that the company's operating income is insufficient to cover its interest expenses.

This drastic decline in the interest coverage ratio raises concerns about Masimo Corporation's ability to service its debt obligations and the sustainability of its financial position. Further analysis of the company's financial performance and capital structure is recommended to assess the underlying factors contributing to this sharp decline in the interest coverage ratio.