MACOM Technology Solutions Holdings Inc (MTSI)

Interest coverage

		Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	96,662	127,542	251,671	65,008	-14,182
Interest expense	US$ in thousands	5,136	12,384	8,551	22,063	27,380
Interest coverage		18.82	10.30	29.43	2.95	-0.52

September 30, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $96,662K ÷ $5,136K
= 18.82

MACOM Technology Solutions Holdings Inc's interest coverage ratio, a key financial metric used to assess a company's ability to pay interest expenses on its outstanding debt, has displayed varying trends over the past five years.

In Sep 30, 2020, the interest coverage ratio was negative at -0.52, indicating that the company did not generate sufficient operating income to cover its interest expenses during that period. This is a concerning sign as it suggests potential financial distress and an inability to meet debt obligations.

However, there has been a significant improvement in the interest coverage ratio in subsequent years. In Sep 30, 2021, the ratio improved to 2.95, indicating that the company's operating income was nearly three times its interest expenses, demonstrating a healthier financial position.

The trend continued to show improvement in the following years, with the interest coverage ratios reaching 29.43 in Sep 30, 2022, and 10.30 in Sep 30, 2023. These high ratios suggest that the company's operating income significantly exceeded its interest expenses, reflecting strong financial performance and a reduced risk of default on debt payments.

The most recent data point for Sep 30, 2024, shows an interest coverage ratio of 18.82, indicating that the company's ability to cover interest expenses remains robust, albeit slightly lower compared to the previous year.

Overall, the analysis of MACOM Technology Solutions Holdings Inc's interest coverage ratios suggests an improvement in its financial health and operational efficiency over the past few years. However, investors and analysts should continue to monitor this ratio to ensure the company maintains its ability to meet its debt obligations in the long term.