Viavi Solutions Inc (VIAV)

Interest coverage

		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	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	38,800	59,000	64,200	63,100	87,800	120,300	158,000	176,900	88,400	76,600	76,600	76,000	145,500	133,600	113,000	115,900	107,400	114,000	108,400	94,100
Interest expense (ttm)	US$ in thousands	30,900	31,500	30,500	28,800	27,100	25,200	24,900	25,800	23,300	21,000	18,200	14,700	14,700	-900	3,900	8,700	13,400	33,200	32,800	32,500
Interest coverage		1.26	1.87	2.10	2.19	3.24	4.77	6.35	6.86	3.79	3.65	4.21	5.17	9.90	—	28.97	13.32	8.01	3.43	3.30	2.90

June 30, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $38,800K ÷ $30,900K
= 1.26

Viavi Solutions Inc's interest coverage ratio has shown some fluctuations over the past several quarters. The interest coverage ratio measures the company's ability to cover its interest expenses with its operating income. A higher ratio indicates a stronger ability to meet interest obligations.

Looking at the trend, the interest coverage ratio has generally been on an upward trajectory since December 2021, with the ratio steadily increasing from 4.21 in March 2022 to a peak of 28.97 in March 2020. This indicates that the company's operating income has been sufficiently covering its interest expenses during this period.

However, there was a noticeable decline in the interest coverage ratio in the most recent quarter, dropping to 1.26 in June 2024. This could potentially raise concerns about the company's ability to cover its interest payments with operating income in the short term. It is important to investigate the reasons behind this decrease and monitor future developments closely.

Overall, while Viavi Solutions Inc has demonstrated a strong ability to cover its interest expenses in the past, the recent decline in the interest coverage ratio warrants further scrutiny and monitoring to ensure the company's financial health and stability.