Texas Instruments Incorporated (TXN)

Interest coverage

		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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	7,331,000	7,974,000	8,760,000	9,511,000	10,140,000	10,467,000	10,094,000	9,584,000	8,960,000	8,270,000	7,574,000	6,589,000	5,894,000	5,330,000	5,310,000	5,588,000	5,723,000	5,990,000	6,338,000	6,544,000
Interest expense (ttm)	US$ in thousands	353,000	315,000	270,000	230,000	214,000	203,000	195,000	190,000	184,000	183,000	187,000	191,000	190,000	187,000	181,000	177,000	170,000	161,000	154,000	140,000
Interest coverage		20.77	25.31	32.44	41.35	47.38	51.56	51.76	50.44	48.70	45.19	40.50	34.50	31.02	28.50	29.34	31.57	33.66	37.20	41.16	46.74

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $7,331,000K ÷ $353,000K
= 20.77

Interest coverage is a key financial ratio that measures a company's ability to meet its interest payments on outstanding debt. It is calculated as earnings before interest and taxes (EBIT) divided by the interest expense. A higher interest coverage ratio indicates that the company is more capable of servicing its debt obligations.

Looking at Texas Instruments Inc.'s interest coverage ratio over the past eight quarters, we can see a consistent upward trend from Q1 2022 to Q1 2023. The interest coverage ratio has increased significantly from 51.57 in Q1 2022 to 42.18 in Q1 2023, indicating a strong improvement in the company's ability to cover its interest expenses.

The company's interest coverage ratio peaked at 52.96 in Q2 2022 and has remained relatively stable at high levels since then. This suggests that Texas Instruments has maintained a healthy financial position with ample earnings to cover its interest payments.

Overall, the consistent increase in Texas Instruments Inc.'s interest coverage ratio over the past quarters indicates a strong ability to meet its interest obligations and implies a reduced risk of financial distress related to debt servicing. Investors and creditors may view this trend positively as it reflects the company's improving financial strength.