Penumbra Inc (PEN)

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	22,287	81,389	-21,492	-7,501	-38,942
Interest expense	US$ in thousands	1,418	1,739	137	16,068	17,370
Interest coverage		15.72	46.80	-156.88	-0.47	-2.24

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $22,287K ÷ $1,418K
= 15.72

Interest coverage ratio is a key financial metric that indicates a company's ability to pay interest expenses on its outstanding debt. A higher interest coverage ratio is generally preferred as it signifies a stronger ability to meet interest obligations.

Analyzing the interest coverage ratios of Penumbra Inc over the past five years shows a fluctuating trend.

As of December 31, 2020, the interest coverage ratio was -2.24, indicating that the company's operating income was not sufficient to cover its interest expenses. This suggests a potential risk of financial distress.

The ratio further deteriorated by December 31, 2021, reaching -0.47. This signifies an even weaker ability to cover interest payments from operating income.

The situation improved significantly by December 31, 2022, with the interest coverage ratio at -156.88. While this extreme ratio may suggest an anomaly or a significant change in the company's financial structure, it is important to investigate further to understand the underlying reasons for such a drastic shift.

By December 31, 2023, the interest coverage ratio recovered to 46.80, indicating a much stronger ability to cover interest expenses from operating income. This is a positive sign of financial health and indicates improved profitability.

In the most recent period as of December 31, 2024, the interest coverage ratio stood at 15.72, demonstrating a continued improvement in the company's ability to meet its interest obligations.

Overall, the fluctuating trend in Penumbra Inc's interest coverage ratios over the past five years suggests varying levels of financial risk and operational efficiency. It would be essential for stakeholders to closely monitor this metric to assess the company's financial health and risk profile.