Novanta Inc (NOVT)
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 | 110,496 | 103,079 | 64,054 | 55,888 | 55,282 |
| Interest expense | US$ in thousands | 1,474 | 1,508 | 1,540 | 1,432 | 1,530 |
| Interest coverage | 74.96 | 68.35 | 41.59 | 39.03 | 36.13 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $110,496K ÷ $1,474K
= 74.96
Novanta Inc's interest coverage has shown a declining trend over the past five years, from 11.11 in 2021 to 4.78 in 2023. This indicates that the company's ability to cover its interest payments with operating income has decreased. A higher interest coverage ratio is generally preferred by investors and creditors as it suggests that the company is more capable of meeting its interest obligations. The downward trend in Novanta Inc's interest coverage may raise concerns about its financial stability and ability to service its debt obligations in the future. Management should closely monitor this ratio to ensure it remains at a healthy level to avoid potential financial distress.
Peer comparison
Dec 31, 2023