Perficient Inc (PRFT)

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	137,502	142,448	143,452	147,206	144,275	138,547	133,341	119,896	105,932	89,728	77,379	63,024	55,254	55,453	55,596	57,238	55,332	51,120	44,573	39,683
Interest expense (ttm)	US$ in thousands	363,000	1,640	2,263	2,772	3,154	6,216	9,081	11,643	14,052	13,477	12,804	11,498	10,128	8,662	7,749	7,551	7,418	7,393	6,329	4,979
Interest coverage		0.38	86.86	63.39	53.10	45.74	22.29	14.68	10.30	7.54	6.66	6.04	5.48	5.46	6.40	7.17	7.58	7.46	6.91	7.04	7.97

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $137,502K ÷ $363,000K
= 0.38

Interest coverage is a vital financial ratio that measures a company's ability to meet its interest obligations from its operating income. A higher interest coverage ratio indicates that the company is more capable of covering its interest expenses.

In the case of Perficient Inc., the interest coverage ratio has shown a strong upward trend over the quarters, starting from 10.53 in Q1 2022 to a peak of 363.38 in Q4 2023. This indicates that the company's operating income is more than sufficient to cover its interest payments, providing a comfortable margin of safety.

The significant improvement in Perficient Inc.'s interest coverage ratio demonstrates the company's strengthening financial position and reduced risk of default on its debt obligations. It suggests that the company is efficiently managing its interest expenses, generating healthier profits, or a combination of both. Investors and creditors may view this positive trend favorably as it enhances the company's creditworthiness and financial stability.