Gentherm Inc (THRM)

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	107,015	77,439	48,307	115,006	89,217
Interest expense	US$ in thousands	15,300	28	16	2,758	4,559
Interest coverage		6.99	2,765.68	3,019.19	41.70	19.57

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $107,015K ÷ $15,300K
= 6.99

Interest coverage measures a company's ability to pay interest expenses on its outstanding debt. A higher ratio indicates a stronger ability to meet interest obligations.

Looking at Gentherm Inc's interest coverage ratio over the past five years, we observe a fluctuating trend. As of December 31, 2020, the ratio stood at 19.57, indicating that the company generated earnings 19.57 times greater than its interest expense, reflecting a solid ability to meet interest obligations.

By December 31, 2021, the interest coverage ratio significantly improved to 41.70, signaling a further enhancement in the company's capacity to cover interest payments. This suggests improving financial health and profitability.

However, the interest coverage ratio for December 31, 2022, saw a drastic spike to 3,019.19, followed by a slight decrease to 2,765.68 by December 31, 2023. Such exceptionally high values may be the result of specific accounting or financial events impacting the denominator of the ratio, raising a possible need for further investigation and analysis.

Conversely, by December 31, 2024, the interest coverage ratio dropped to 6.99. While still above 1, indicating the company's ability to meet interest obligations, this decline may warrant monitoring to ensure the company maintains a healthy financial position.

Overall, Gentherm Inc has shown generally strong interest coverage ratios in recent years, with some anomalies that may require closer scrutiny to fully understand the company's financial health and stability.