Sensata Technologies Holding NV (ST)

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	143,956	181,676	575,521	593,208	337,398
Interest expense	US$ in thousands	155,793	150,860	178,819	182,582	171,757
Interest coverage		0.92	1.20	3.22	3.25	1.96

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $143,956K ÷ $155,793K
= 0.92

The interest coverage ratio for Sensata Technologies Holding NV has shown a fluctuating trend over the past five years. In December 31, 2020, the interest coverage ratio was at a relatively low level of 1.96, indicating that the company's operating income was almost sufficient to cover its interest expenses.

However, there was an improvement in the interest coverage ratio in the subsequent years, with ratios of 3.25 in December 31, 2021 and 3.22 in December 31, 2022. These higher ratios suggest that Sensata Technologies had more operating income available to cover its interest obligations during these years.

The ratio took a significant downturn in December 31, 2023, decreasing to 1.20. This decrease may indicate potential challenges in generating enough operating income to cover interest expenses during that period.

Moreover, by the end of December 31, 2024, the interest coverage ratio declined further to 0.92, falling below the ideal threshold of 1. This sharp decrease raises concerns as it implies that the company may be facing difficulty in meeting its interest payment obligations from its operating income alone.

Overall, the fluctuating trend in Sensata Technologies' interest coverage ratio highlights the importance of closely monitoring the company's ability to generate sufficient operating income to cover its interest expenses, as a declining ratio may indicate increased financial risk.