Super Micro Computer Inc (SMCI)

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	871,071	712,995	761,225	702,355	699,024	542,182	344,460	213,142	137,247	119,909	121,278	95,282	91,900	84,936	89,498	106,566	103,554	101,746	93,492	107,236
Interest expense (ttm)	US$ in thousands	14,791	8,416	10,491	9,910	10,153	9,547	6,413	4,120	3,196	2,615	2,485	2,456	2,367	2,358	2,236	2,840	3,593	4,864	6,690	6,395
Interest coverage		58.89	84.72	72.56	70.87	68.85	56.79	53.71	51.73	42.94	45.85	48.80	38.80	38.83	36.02	40.03	37.52	28.82	20.92	13.97	16.77

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $871,071K ÷ $14,791K
= 58.89

Super Micro Computer Inc's interest coverage ratio has shown a generally positive trend over the past eight quarters, indicating the company's ability to comfortably meet its interest obligations from its operating profits. The interest coverage ratio has consistently remained above 50, with the most recent quarter reporting a robust interest coverage of 58.85. This suggests that the company's operating income is significantly higher than its interest expenses, providing a cushion to cover its debt payments.

The increasing trend in the interest coverage ratio from Q3 2022 to Q2 2024 reflects the company's improving ability to service its debt. A higher interest coverage ratio is typically seen as a positive sign by investors and lenders, as it indicates a lower risk of default due to insufficient earnings to cover interest payments.

Super Micro Computer Inc's interest coverage ratio has exceeded 50 for the past eight quarters, highlighting the company's strong financial position and ability to manage its debt obligations effectively. Overall, the consistent and increasing interest coverage ratio indicates a healthy financial performance and a lower risk profile for the company in terms of debt servicing.