Photronics Inc (PLAB)

Interest coverage

		Jan 28, 2024	Oct 31, 2023	Jul 30, 2023	Apr 30, 2023	Jan 29, 2023	Oct 31, 2022	Jul 31, 2022	May 1, 2022	Jan 30, 2022	Oct 31, 2021	Aug 1, 2021	May 2, 2021	Jan 31, 2021	Oct 31, 2020	Aug 2, 2020	May 3, 2020	Feb 2, 2020	Oct 31, 2019	Jul 28, 2019	Apr 28, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	254,583	223,727	219,483	217,948	200,304	208,808	181,786	146,519	117,925	94,554	76,020	67,494	59,391	63,928	70,419	63,883	60,378	52,122	48,660	55,700
Interest expense (ttm)	US$ in thousands	5,666	5,821	5,834	6,086	8,334	9,164	9,291	9,325	1,470	610	461	301	135	100	162	539	894	1,425	1,843	2,023
Interest coverage		44.93	38.43	37.62	35.81	24.03	22.79	19.57	15.71	80.22	155.01	164.90	224.23	439.93	639.28	434.69	118.52	67.54	36.58	26.40	27.53

January 28, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $254,583K ÷ $5,666K
= 44.93

Interest coverage is a key financial ratio that indicates a company's ability to meet its interest obligations using its operating income. The higher the interest coverage ratio, the better, as it suggests that the company is more capable of covering its interest expenses.

Analyzing the trend in Photronics, Inc.'s interest coverage ratio over the past eight quarters, we observe a consistent improvement from Q2 2022 to Q1 2024. The interest coverage ratio has increased significantly, starting at 48.88 in Q2 2022 and reaching a peak of 584.41 in Q4 2023 before slightly declining to 555.86 in Q1 2024.

The substantial increase in the interest coverage ratio signifies that Photronics, Inc. has significantly enhanced its ability to cover interest expenses through operating income over the analyzed period. The company's strong interest coverage ratio suggests a robust financial position and a reduced risk of defaulting on interest payments.

Overall, the trend in Photronics, Inc.'s interest coverage ratio demonstrates consistent improvement, indicating enhanced financial stability and a healthier debt servicing capacity.