Insperity Inc (NSP)
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 | 154,000 | 252,215 | 259,632 | 175,776 | 197,286 |
| Interest expense | US$ in thousands | 28,000 | 27,000 | 14,207 | 7,458 | 8,016 |
| Interest coverage | 5.50 | 9.34 | 18.27 | 23.57 | 24.61 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $154,000K ÷ $28,000K
= 5.50
Interest coverage is a key financial ratio that assesses a company's ability to meet its interest obligations. In the case of Insperity Inc, the interest coverage ratio has shown a declining trend over the past five years. Starting at a robust level of 24.61 in December 2020, the ratio decreased to 23.57 by the end of 2021 and further dropped to 18.27 by the end of 2022.
This downward trend continued as the interest coverage ratio fell to 9.34 by December 31, 2023, reflecting a significant decrease in the company's ability to cover its interest payments. The most recent data point, as of December 31, 2024, indicates an even lower ratio of 5.50, suggesting a further deterioration in Insperity's capacity to meet its interest expenses from its operating income.
The declining trend in interest coverage raises concerns about Insperity's financial health and ability to handle its debt obligations. Investors and creditors may view this trend as a signal of increased financial risk and may lead to higher borrowing costs or limitations on accessing additional financing. It is crucial for the company to closely monitor and address this trend to ensure long-term financial stability and meet its debt obligations effectively.
Peer comparison
Dec 31, 2024