SPS Commerce Inc (SPSC)

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	88,883	77,248	71,182	55,085	50,158
Interest expense	US$ in thousands	—	—	142	1,544	2,607
Interest coverage		—	—	501.28	35.68	19.24

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $88,883K ÷ $—K
= —

Interest coverage is a key financial ratio that indicates a company's ability to meet its interest obligations based on its operating income. For SPS Commerce Inc, the interest coverage ratio has seen a significant improvement over the years.

As of December 31, 2020, the interest coverage ratio was 19.24, indicating that the company's operating income was sufficient to cover its interest expenses approximately 19 times. This ratio improved to 35.68 as of December 31, 2021, reflecting a further increase in the company's ability to meet its interest obligations.

The most notable increase was seen as of December 31, 2022, with an interest coverage ratio of 501.28. This exceptionally high ratio suggests a very strong ability to cover interest expenses, indicating a healthy financial position for SPS Commerce Inc.

However, the data shows that interest coverage ratios are unavailable for the years 2023 and 2024. While the lack of data for these periods makes it difficult to assess the company's ability to meet its interest obligations, the trend of increasing interest coverage ratios from 2020 to 2022 indicates a positive financial performance.

Overall, the historical trend of increasing interest coverage ratios for SPS Commerce Inc reflects a strong ability to meet interest expenses and suggests a healthy financial position for the company.