Shutterstock (SSTK)

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	68,708	68,400	93,624	108,106	85,266
Interest expense	US$ in thousands	10,561	1,856	1,336	67	7,324
Interest coverage		6.51	36.85	70.08	1,613.52	11.64

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $68,708K ÷ $10,561K
= 6.51

The interest coverage ratio reveals a company's ability to meet its interest payment obligations based on its earnings. In the case of Shutterstock, the trend in interest coverage over the past five years shows considerable fluctuations.

As of December 31, 2020, Shutterstock exhibited an interest coverage ratio of 11.64, indicating a relatively healthy ability to cover its interest expenses with its earnings. However, this ratio skyrocketed to an exceptionally high level of 1,613.52 as of December 31, 2021. Such an extraordinarily high ratio may be a result of a sharp increase in earnings or a significant decrease in interest expenses during this period.

Moving forward, the interest coverage ratio decreased to 70.08 as of December 31, 2022, still indicating a strong ability to cover interest payments. The ratio further declined to 36.85 as of December 31, 2023, showing a significant decrease compared to the previous year. The most recent data point, December 31, 2024, indicates an interest coverage ratio of 6.51, which suggests a further decline in the company's ability to cover interest expenses with its earnings.

Overall, while the interest coverage ratio of Shutterstock has shown variability across the years, it is essential to pay attention to the decreasing trend observed in the most recent years as it may indicate a potential strain on the company's ability to meet its interest payment obligations in the future.