SanDisk Corp (SNDK)
Interest coverage
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 544,576 | 1,504,010 | 1,519,630 | 626,916 | 1,457,430 |
| Interest expense | US$ in thousands | 14,952 | 14,984 | 3,481 | 0 | 0 |
| Interest coverage | 36.42 | 100.37 | 436.55 | — | — |
December 31, 2015 calculation
Interest coverage = EBIT ÷ Interest expense
= $544,576K ÷ $14,952K
= 36.42
Based on the provided data, the interest coverage ratio of SanDisk Corp underwent fluctuations over the period from December 31, 2011, to December 31, 2015.
The interest coverage ratio for December 31, 2011, and December 31, 2012, is not available ("—"), suggesting that the company may have had either very low or negative earnings compared to its interest expenses during these years.
The ratio significantly improved in the subsequent years. By December 31, 2013, the interest coverage ratio stood at 436.55, indicating a substantial increase in earnings relative to the interest payments, which reflects a stronger financial position and ability to meet debt obligations.
However, there was a noticeable decline in the interest coverage ratio by December 31, 2015, to 36.42. While still above 1 (which generally indicates the company can cover its interest expenses), this decrease may suggest a potential increase in interest expenses or a decrease in earnings compared to the previous year.
Overall, the trend in the interest coverage ratio for SanDisk Corp highlights the importance of monitoring the company's ability to generate earnings sufficient to cover its interest payments, as it indicates the firm's capacity to service its debt and potential financial health.
Peer comparison
Dec 31, 2015