UFP Technologies Inc (UFPT)

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	57,547	55,543	66,538	61,832	55,480	49,506	28,510	22,378	21,276	21,540	20,192	16,927	16,365	18,251	20,640	24,055	24,321	22,926	22,794	22,099
Interest expense (ttm)	US$ in thousands	3,646	3,763	3,660	3,304	2,762	1,929	1,115	382	71	49	50	83	83	150	298	459	674	878	1,068	1,278
Interest coverage		15.78	14.76	18.18	18.71	20.09	25.66	25.57	58.58	299.66	439.59	403.84	203.94	197.17	121.67	69.26	52.41	36.08	26.11	21.34	17.29

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $57,547K ÷ $3,646K
= 15.78

The interest coverage ratio of UFP Technologies Inc has shown a strong improvement over the past quarters. The ratio has been consistently higher than 1, indicating that the company is generating sufficient operating income to cover its interest expenses.

The interest coverage ratio increased significantly from 2019 to 2023, with the latest ratio standing at 15.78. This implies that UFP Technologies Inc's operating income is able to cover its interest expenses nearly sixteen times over, indicating a healthy financial position and reduced risk of default on debt obligations.

The trend of increasing interest coverage ratios reflects positively on the company's ability to manage its debt and generate enough earnings to meet interest payments. Investors and creditors typically view a high interest coverage ratio as a positive indicator of financial health and strength.