Advance Auto Parts Inc (AAP)
Interest coverage
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 114,377 | 714,151 | 838,717 | 749,907 | 677,180 |
| Interest expense | US$ in thousands | 88,055 | 51,060 | 37,791 | 46,886 | 39,898 |
| Interest coverage | 1.30 | 13.99 | 22.19 | 15.99 | 16.97 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $114,377K ÷ $88,055K
= 1.30
Interest coverage for Advance Auto Parts Inc has shown a declining trend over the past five years. The ratio was relatively high in 2019 at 16.97, indicating the company's strong ability to cover its interest expenses. However, from 2020 onwards, there has been a significant drop in the interest coverage ratio, reaching its lowest point of 1.30 in 2023. This decline suggests that the company's ability to meet its interest obligations with its earnings has weakened over time. Further investigation may be warranted to understand the factors contributing to this trend and assess the company's financial health and risk profile.
Peer comparison
Dec 31, 2023