Insulet Corporation (PODD)
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 | 250,800 | 46,300 | 82,200 | 57,800 | 49,100 |
| Interest expense | US$ in thousands | 36,200 | 36,000 | 61,700 | 48,100 | 34,600 |
| Interest coverage | 6.93 | 1.29 | 1.33 | 1.20 | 1.42 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $250,800K ÷ $36,200K
= 6.93
The interest coverage ratio measures a company's ability to meet its interest obligations on outstanding debt. A higher interest coverage ratio indicates a company is more capable of servicing its debt.
In the case of Insulet Corporation, the interest coverage ratio has shown a fluctuating trend over the past five years. In 2023, the interest coverage ratio significantly improved to 28.95, reflecting a substantial increase compared to the previous year. This sharp increase suggests that Insulet Corporation's earnings before interest and taxes (EBIT) are significantly higher relative to its interest expenses in 2023.
Conversely, in 2022, the interest coverage ratio was relatively low at 1.80, indicating that the company's EBIT barely covered its interest expenses. The ratios for 2021, 2020, and 2019 were also on the lower side at 2.06, 1.14, and 1.45, respectively, suggesting a similar trend of tighter coverage of interest payments by EBIT in those years.
The substantial improvement in the interest coverage ratio for 2023 is a positive signal, indicating that Insulet Corporation's financial performance has strengthened, making it more capable of paying interest expenses. However, consistent monitoring of this ratio in the future will be essential to assess the company's ongoing ability to service its debt obligations.
Peer comparison
Dec 31, 2023