ON Semiconductor Corporation (ON)

Interest coverage

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	2,608,700	2,773,500	2,490,500	2,378,400	2,455,500	2,162,400	2,135,300	1,805,100	1,286,600	950,400	666,700	452,900	342,800	305,800	141,500	259,000	422,700	519,400	811,000	877,200
Interest expense (ttm)	US$ in thousands	74,800	86,500	94,000	99,700	94,900	99,400	107,600	118,600	130,400	140,200	150,500	159,300	168,400	168,800	167,300	159,100	148,300	139,000	129,500	128,400
Interest coverage		34.88	32.06	26.49	23.86	25.87	21.75	19.84	15.22	9.87	6.78	4.43	2.84	2.04	1.81	0.85	1.63	2.85	3.74	6.26	6.83

December 31, 2023 calculation

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

Interest coverage measures a company's ability to meet its interest payments on outstanding debt obligations. It is calculated by dividing earnings before interest and taxes (EBIT) by interest expenses.

ON Semiconductor Corp.'s interest coverage has shown an increasing trend over the past quarters, indicating improving financial health and capacity to cover its interest expenses. In Q4 2022, the interest coverage was 27.63, which demonstrates the company generated 27.63 times more earnings than required to cover its interest expenses.

This positive trend continued into Q1 2023 with interest coverage improving to 40.69, showcasing the company's strengthened ability to meet its interest obligations. The subsequent quarters also reflected strong interest coverage ratios of 70.10 in Q2 2023 and 253.46 in Q3 2023, indicating a substantial increase in earnings relative to interest expenses.

Overall, ON Semiconductor Corp.'s interest coverage has been robust and on an upward trajectory, suggesting sound financial management and a reduced risk of financial distress due to interest payment obligations.