Viavi Solutions Inc (VIAV)

Interest coverage

Jun 30, 2025 Mar 31, 2025 Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 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
Earnings before interest and tax (EBIT) (ttm) US$ in thousands 60,500 41,400 30,900 20,900 32,400 44,800 50,000 58,100 75,800 113,800 157,400 182,400 100,900 83,200 92,900 101,500 186,800 196,600 178,700 177,600
Interest expense (ttm) US$ in thousands 60,000 60,000 30,200 30,600 30,900 31,500 31,100 29,400 27,100 26,200 31,100 37,300 119,900 121,800 113,200 104,400 19,900 19,400 24,200 29,000
Interest coverage 1.01 0.69 1.02 0.68 1.05 1.42 1.61 1.98 2.80 4.34 5.06 4.89 0.84 0.68 0.82 0.97 9.39 10.13 7.38 6.12

June 30, 2025 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $60,500K ÷ $60,000K
= 1.01

The interest coverage ratio for Viavi Solutions Inc. has exhibited significant fluctuations over the analyzed period from September 2020 through June 2025. Initially, the ratio demonstrated a strong capacity to cover interest expenses, marked by a value of 6.12 in September 2020 and increasing to 10.13 by March 2021, indicating an improved ability to meet interest obligations relative to earnings.

However, a notable decline began around September 2021, where the ratio sharply dropped to 0.97, subsequently falling below 1.0 in December 2021 (0.82) and March 2022 (0.68). These levels suggest that, during this period, the company's earnings before interest and taxes were insufficient to comfortably cover interest expenses, indicating increased financial risk and potential strain on liquidity.

Throughout late 2022 and into 2023, the ratio recovered somewhat, reaching a high of 5.06 in December 2022 before gradually declining again to 2.80 by June 2023. In the most recent quarters, the ratio has continued to weaken, at 1.98 in September 2023 and further down to approximately 1.01 in June 2025. This persistent decline suggests that the company’s earnings are increasingly strained relative to interest obligations, heightening concern over its long-term debt servicing capacity.

Overall, while the company experienced periods of strong interest coverage in early 2021, recent data indicates a sustained weakening trend. The ratio's proximity to or below unity in many recent periods underscores heightened financial vulnerability and a decreased cushion for interest expenses, which may necessitate strategic financial management to restore earnings levels or optimize debt structures.