Synaptics Incorporated (SYNA)

Interest coverage

		Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Earnings before interest and tax (EBIT)	US$ in thousands	—	-59,300	181,500	350,700	149,600
Interest expense	US$ in thousands	12,900	65,300	55,500	30,200	29,500
Interest coverage		0.00	-0.91	3.27	11.61	5.07

June 30, 2025 calculation

Interest coverage = EBIT ÷ Interest expense
= $—K ÷ $12,900K
= 0.00

The interest coverage ratio for Synaptics Incorporated over the specified periods reflects significant fluctuations, indicative of changing financial health and operational performance. As of June 30, 2021, the company exhibited a robust interest coverage ratio of 5.07, suggesting that its earnings before interest and taxes (EBIT) were more than sufficient to cover interest expenses approximately five times over. This points to a healthy financial position and sufficient profitability to meet interest obligations comfortably.

By June 30, 2022, the ratio experienced a substantial improvement to 11.61, nearly doubling the previous year's figure. This indicates an even stronger capacity to service interest on its debt, likely driven by increased earnings, improved operational efficiency, or both, and reflecting a period of improved financial stability.

However, the situation changed markedly by June 30, 2023, when the ratio fell to 3.27. Although still positive, this decline suggests a reduction in earnings relative to interest expenses, raising concerns about the company's ability to comfortably meet its interest obligations. The decrease could result from declining profitability, increased interest expenses, or a combination of both, signaling potential stress on the company's financial health.

The trend further deteriorates by June 30, 2024, with the ratio dropping into negative territory at -0.91. A negative interest coverage ratio indicates that the company’s EBIT is insufficient to cover interest expenses, implying it may be operating at a loss before interest costs or accumulating interest expenses without corresponding earnings. This situation is a strong warning sign of financial distress and increasing difficulty in maintaining debt servicing capacity.

Finally, as of June 30, 2025, the interest coverage ratio reaches zero, implying that EBIT is exactly equal to interest expenses, leaving no margin of safety. This parity suggests that the company is just able to meet interest costs without profit to cover other operational expenses or to invest back into the business. Such a scenario underscores a precarious financial position, with heightened vulnerability to any adverse shifts in earnings.

Overall, the progressive decline in Synaptics Incorporated’s interest coverage ratio over these periods indicates a trend toward increased financial strain. The company’s decreasing ability to generate sufficient earnings to cover interest obligations highlights potential liquidity concerns and warrants further examination of underlying operational factors, debt management strategies, and profitability trends.