Sitime Corporation (SITM)

Interest coverage

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	-104,518	-99,472	16,142	32,843	-8,645
Interest expense	US$ in thousands	—	—	19,037	7,438	726
Interest coverage		—	—	0.85	4.42	-11.91

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $-104,518K ÷ $—K
= —

The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. A higher ratio indicates a stronger ability to meet interest obligations.

Based on the data provided for Sitime Corporation:

1. December 31, 2020: The interest coverage ratio was -11.91, indicating that the company's operating income was not sufficient to cover its interest expenses. A negative ratio suggests financial distress and raises concerns about the company's ability to meet its debt obligations.

2. December 31, 2021: The interest coverage ratio improved to 4.42, indicating that the company's operating income was more than sufficient to cover its interest expenses. This is a positive sign of improved financial performance and ability to meet debt obligations.

3. December 31, 2022: The interest coverage ratio dropped to 0.85, suggesting a decline in the company's ability to cover its interest expenses with operating income. A ratio below 1 indicates that the company is not generating enough income to meet its interest payments, which may raise concerns about its financial stability.

4. December 31, 2023 and 2024: The data for these periods was not provided ("—"), making it difficult to assess the company's interest coverage during these years. Without this information, it is challenging to gauge the trend in the company's ability to cover its interest expenses.

In conclusion, Sitime Corporation experienced fluctuations in its interest coverage ratio over the years. While there was an improvement in 2021, the significant drop in 2022 raises concerns about the company's ability to meet its interest obligations. It is essential for the company to closely monitor its financial performance and strive to maintain a healthy interest coverage ratio to ensure financial stability.