SolarEdge Technologies Inc (SEDG)
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 | 82,018 | 166,120 | 193,600 | 168,996 | 185,000 |
| Interest expense | US$ in thousands | 1,269 | 1,530 | 6,376 | 5,330 | 4,805 |
| Interest coverage | 64.63 | 108.58 | 30.36 | 31.71 | 38.50 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $82,018K ÷ $1,269K
= 64.63
Interest coverage is a financial ratio that indicates a company's ability to repay its interest expenses with its operating profits. In the case of Solaredge Technologies Inc, the interest coverage ratio for the past five years shows a decreasing trend.
In 2019, the interest coverage ratio was at a high level of 930.77, indicating that the company's operating profits were significantly higher compared to its interest expenses, providing a strong cushion to cover interest payments. However, the ratio has been declining in the following years, reaching 323.56 in 2020, 61.27 in 2021, and data missing for 2022 and 2023.
The decreasing trend in interest coverage can raise concerns about the company's ability to comfortably meet its interest obligations from its operating profits. It signals a potential increase in financial risk as the company may face challenges in servicing its debt if operating profits decrease or interest expenses rise.
It would be advisable for stakeholders to closely monitor Solaredge Technologies Inc's interest coverage ratio in the upcoming periods to assess the company's financial health and its ability to manage its debt obligations effectively.
Peer comparison
Dec 31, 2023