Advance Auto Parts Inc (AAP)
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 | -687,065 | 119,902 | 655,422 | 843,716 | 697,901 |
| Interest expense | US$ in thousands | 81,033 | 88,055 | 51,060 | 37,791 | 46,886 |
| Interest coverage | -8.48 | 1.36 | 12.84 | 22.33 | 14.89 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $-687,065K ÷ $81,033K
= -8.48
The interest coverage ratio for Advance Auto Parts Inc has shown fluctuating trends over the years. As of December 31, 2020, the ratio was 14.89, indicating that the company was able to cover its interest expense 14.89 times over with its operating income. This ratio improved significantly to 22.33 by December 31, 2021, demonstrating even stronger ability to meet interest obligations.
However, there was a notable decline in the interest coverage ratio to 12.84 by December 31, 2022, potentially signaling a decrease in the company's operating income relative to its interest expenses. This was followed by a sharp drop to 1.36 by December 31, 2023, indicating a significant challenge in meeting interest payments with operating income.
By December 31, 2024, the interest coverage ratio fell to -8.48, implying that the company's operating income was insufficient to cover its interest expenses, potentially raising concerns about its financial stability and ability to service debt obligations.
Overall, the fluctuating interest coverage ratios suggest varying levels of financial risk and operational performance for Advance Auto Parts Inc during the period under review. It is essential for investors and stakeholders to closely monitor these ratios to assess the company's ability to manage its debt and maintain financial health.
Peer comparison
Dec 31, 2024