MKS Instruments Inc (MKSI)
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 | 464,000 | -1,572,000 | 610,000 | 690,000 | 452,000 |
| Interest expense | US$ in thousands | 284,000 | 356,000 | 177,000 | 25,000 | 29,000 |
| Interest coverage | 1.63 | -4.42 | 3.45 | 27.60 | 15.59 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $464,000K ÷ $284,000K
= 1.63
MKS Instruments Inc's interest coverage ratio has shown significant fluctuations over the years based on the provided data. The interest coverage ratio measures the company's ability to meet its interest obligations with its earnings before interest and taxes (EBIT).
As of December 31, 2020, the interest coverage ratio stood at 15.59, indicating that the company's EBIT was 15.59 times its interest expenses, reflecting a strong ability to cover interest payments comfortably.
By December 31, 2021, MKS Instruments Inc's interest coverage ratio improved further to 27.60, signaling a notable enhancement in its ability to meet interest obligations, showcasing strong financial health and operational efficiency.
However, by December 31, 2022, the interest coverage ratio dropped to 3.45, suggesting a decline in the company's ability to cover interest expenses with its earnings. This decrease could raise concerns about the company's financial stability and its capacity to handle debt-related obligations.
The trend continued to deteriorate by December 31, 2023, as the interest coverage ratio turned negative at -4.42. A negative interest coverage ratio implies that the company's EBIT is insufficient to cover interest payments, raising serious concerns about its financial health and the ability to service its debt.
Subsequently, by December 31, 2024, the interest coverage ratio improved slightly to 1.63; however, it remains below 1, indicating that the company's EBIT is not sufficient to cover its interest expenses. This situation could raise red flags for creditors and investors regarding the company's financial risk and solvency.
In summary, MKS Instruments Inc's interest coverage ratio has exhibited volatility, with periods of strength followed by concerning declines. It is essential for the company to carefully manage its debt levels and operational performance to ensure sustainable financial health and meet its interest obligations effectively.
Peer comparison
Dec 31, 2024