Teradyne Inc (TER)

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	—	501,068	844,104	1,178,780	925,197
Interest expense	US$ in thousands	15,298	24,504	3,719	39,765	27,392
Interest coverage		0.00	20.45	226.97	29.64	33.78

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $—K ÷ $15,298K
= 0.00

The interest coverage ratio reflects Teradyne Inc's ability to pay its interest expenses with its earnings before interest and taxes (EBIT). The trend of Teradyne Inc's interest coverage over the past several years shows a varying pattern.

As of December 31, 2020, the interest coverage ratio was 33.78, indicating that the company's EBIT was sufficient to cover its interest expenses approximately 33 times over. This suggests a strong ability to fulfill its interest obligations.

Moving to December 31, 2021, the interest coverage ratio slightly decreased to 29.64, still indicating a healthy capacity to service its interest payments.

However, there was a significant increase in the interest coverage ratio as of December 31, 2022, reaching 226.97. This substantial rise suggests a substantial improvement in Teradyne Inc's ability to cover its interest expenses, signaling robust financial performance.

Subsequently, by December 31, 2023, the interest coverage ratio decreased to 20.45, which, albeit lower than the previous year, still indicates a solid ability to meet interest commitments with operating earnings.

Unexpectedly, as of December 31, 2024, the interest coverage ratio is recorded as 0.00, which could be a cause for concern as it implies that EBIT was insufficient to cover the interest expenses for that period.

In summary, Teradyne Inc has demonstrated strong interest coverage ratios over most of the years analyzed, except for the anomalously low coverage in 2024. Monitoring the interest coverage ratio closely will be essential to assess the company's ability to meet its interest obligations promptly.