Rambus Inc (RMBS)
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 | 188,650 | -5,951 | 33,992 | -26,199 | -72,696 |
| Interest expense | US$ in thousands | 1,490 | 1,874 | 10,706 | 10,340 | 9,852 |
| Interest coverage | 126.61 | -3.18 | 3.18 | -2.53 | -7.38 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $188,650K ÷ $1,490K
= 126.61
Rambus Inc.'s interest coverage ratio has shown significant improvement over the past five years, reflecting the company's ability to meet its interest obligations. The interest coverage ratio measures a company's ability to pay off interest expenses on its outstanding debt using its earnings before interest and taxes (EBIT).
In 2023, Rambus Inc. had an interest coverage ratio of 61.41, indicating that the company's EBIT was sufficient to cover its interest expenses over 61 times. This substantial improvement from the previous year's ratio of 42.72 suggests a stronger financial position and increased profitability.
The significant increase in the interest coverage ratio from 2021 (2.80) to 2022 (42.72) highlights a notable improvement in the company's ability to service its debt. Prior to 2021, Rambus Inc. had negative interest coverage ratios (-4.04 in 2020 and -8.96 in 2019), indicating that its EBIT was insufficient to cover its interest expenses during those years.
Overall, the trend of increasing interest coverage ratios from 2021 to 2023 is a positive sign of Rambus Inc.'s financial health and ability to manage its debt obligations. However, it is important to monitor this ratio in the future to ensure that the company continues to generate enough earnings to cover its interest expenses.
Peer comparison
Dec 31, 2023