Synopsys Inc (SNPS)

Interest coverage

		Oct 31, 2024	Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	1,355,710	1,314,720	1,123,370	810,036	644,199
Interest expense	US$ in thousands	33,677	1,178	1,698	3,365	5,140
Interest coverage		40.26	1,116.06	661.58	240.72	125.33

October 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $1,355,710K ÷ $33,677K
= 40.26

The interest coverage ratio for Synopsys Inc has shown significant fluctuations over the past five years. In 2024, the ratio stood at 40.26, indicating that the company generated sufficient operating income to cover its interest expense by approximately 40 times. This represents a substantial decrease from the extraordinary high ratio of 1,116.06 in 2023, where the company's ability to cover interest expenses was exceptionally strong.

Furthermore, in 2022 and 2021, the interest coverage ratios were 661.58 and 240.72 respectively, reflecting solid financial health and a strong ability to meet interest obligations. However, there was a notable decline in the ratio compared to the previous year. Similarly, in 2020, the interest coverage ratio dropped to 125.33, indicating a further decrease in the company's ability to cover interest payments.

Overall, while Synopsys Inc has generally maintained a healthy interest coverage ratio over the years, the significant fluctuations in the ratio highlight the importance of monitoring the company's financial performance and its ability to meet its interest obligations in the long term.