Super Micro Computer Inc (SMCI)

Interest coverage

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	1,210,770	761,155	344,452	121,286	89,466
Interest expense	US$ in thousands	19,352	10,491	6,413	2,485	2,236
Interest coverage		62.57	72.55	53.71	48.81	40.01

June 30, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $1,210,770K ÷ $19,352K
= 62.57

The interest coverage ratio measures a company's ability to meet its interest obligations from its operating income. For Super Micro Computer Inc, the interest coverage ratio has been consistently strong over the years, showing a positive trend.

As of June 30, 2020, the interest coverage ratio was at 40.01, indicating that the company generated more than enough operating income to cover its interest expenses. Subsequently, the ratio increased to 48.81 by June 30, 2021, and continued to improve reaching 53.71 by June 30, 2022. This upward trend suggests that Super Micro Computer Inc has been effectively managing its interest obligations.

By June 30, 2023, the interest coverage ratio further improved to 72.55, indicating a significant increase in the company's ability to cover its interest expenses, which is a positive sign for creditors and investors. However, by June 30, 2024, the ratio slightly decreased to 62.57, although it still remains at a healthy level.

Overall, the consistent improvement in Super Micro Computer Inc's interest coverage ratio reflects its strong financial health and efficient management of interest expenses, providing a favorable indication to stakeholders regarding the company's ability to meet its debt obligations.