SolarWinds Corp (SWI)

Interest coverage

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Earnings before interest and tax (EBIT)	US$ in thousands	150,373	-819,579	-32,871	52,253	79,862
Interest expense	US$ in thousands	10,718	9,056	9,103	9,200	9,234
Interest coverage		14.03	-90.50	-3.61	5.68	8.65

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $150,373K ÷ $10,718K
= 14.03

The interest coverage ratio for SolarWinds Corp has shown significant fluctuation over the past five years. In 2023, the interest coverage ratio improved to 14.03, indicating that the company generated ample earnings to cover its interest expenses. This is a positive sign of financial health and indicates a strong ability to meet debt obligations from operating income.

However, in 2022, the interest coverage ratio was negative at -90.50, which suggests that the company's operating income was insufficient to cover its interest expenses during that year. A negative interest coverage ratio is a red flag and indicates financial distress.

In 2021, the interest coverage ratio remained negative at -3.61, although it showed some improvement from the previous year. The company's ability to cover interest expenses was still a concern.

In 2020 and 2019, the interest coverage ratios were positive at 5.68 and 8.65, respectively. These ratios indicate that the company was able to cover its interest expenses with its operating income during those years, but the ratios were lower compared to 2023.

Overall, the trend in SolarWinds Corp's interest coverage ratio has been variable, with periods of both strength and weakness. It is essential for the company to maintain a healthy interest coverage ratio to ensure its financial stability and ability to meet debt obligations.