Sensata Technologies Holding NV (ST)

Interest coverage

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	144,932	-135,030	188,211	155,454	168,702	543,714	657,667	707,975	618,773	607,407	527,813	536,183	593,208	591,093	604,124	438,065	366,326	331,728	334,505	478,682
Interest expense (ttm)	US$ in thousands	155,793	153,956	151,922	149,164	150,860	158,780	166,728	173,465	178,819	180,041	180,322	180,693	179,291	181,810	180,802	176,397	171,757	164,477	159,904	158,704
Interest coverage		0.93	-0.88	1.24	1.04	1.12	3.42	3.94	4.08	3.46	3.37	2.93	2.97	3.31	3.25	3.34	2.48	2.13	2.02	2.09	3.02

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $144,932K ÷ $155,793K
= 0.93

Interest coverage ratio is a financial metric used to assess a company's ability to meet its interest obligations on outstanding debt. It is calculated by dividing a company's earnings before interest and taxes (EBIT) by its interest expense. A higher interest coverage ratio indicates that the company is more capable of covering its interest payments.

Analyzing Sensata Technologies Holding NV's interest coverage ratio over time, we observe fluctuations in the ratio. From March 31, 2020, to December 31, 2023, the interest coverage ratio generally ranged from around 1 to 4. This implies varying levels of ability to cover interest expenses during this period.

Notably, the interest coverage ratio was relatively stable and fluctuated within a narrower range between 2 and 3 from March 31, 2021, to September 30, 2022. This period suggests a moderate ability to cover interest payments.

However, there are instances of concern, such as the negative interest coverage ratio on September 30, 2024. A negative ratio indicates that the company's EBIT is insufficient to cover its interest payment obligations, which can raise solvency and liquidity concerns.

In conclusion, Sensata Technologies Holding NV's interest coverage ratio has shown variability over time, indicating fluctuations in the company's ability to cover its interest expenses. Monitoring this ratio is essential to assess the company's financial health and its ability to manage debt obligations effectively.