ON Semiconductor Corporation (ON)

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	2,608,700	2,455,500	1,286,600	342,800	422,700
Interest expense	US$ in thousands	74,800	94,900	130,400	168,400	148,300
Interest coverage		34.88	25.87	9.87	2.04	2.85

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $2,608,700K ÷ $74,800K
= 34.88

The interest coverage ratio for ON Semiconductor Corp. has shown a trend of improvement over the five-year period from 2019 to 2023. The interest coverage ratio measures the company's ability to meet its interest obligations from its operating income.

In 2019, the interest coverage ratio was 4.58, indicating that the company generated operating income 4.58 times higher than its interest expenses for that year. This suggests a moderate level of financial stability in meeting interest payments.

Subsequently, in 2020, the interest coverage ratio decreased to 2.54, signaling a potential vulnerability in the company's ability to cover interest expenses from operating income.

However, there was a significant improvement in 2021, with the interest coverage ratio increasing to 10.56. This sharp rise indicates a robust improvement in the company's ability to cover its interest obligations with operating income.

The positive trend continued in 2022, with the interest coverage ratio further increasing to 34.82, reflecting a substantial enhancement in the company's financial health and ability to comfortably meet its interest payments.

Unfortunately, there is missing data for 2023, making it difficult to assess the current financial position of the company accurately. It would be advisable to obtain the 2023 financial statements to analyze the latest interest coverage ratio and assess the company's ongoing ability to service its debt obligations.