AutoNation Inc (AN)

Interest coverage

		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	Jun 30, 2020	Mar 31, 2020
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	1,251,800	1,194,900	1,218,300	1,408,100	1,531,600	1,623,600	1,754,600	1,888,200	1,979,400	2,097,000	2,087,400	2,075,500	1,901,400	1,593,300	1,362,800	1,230,000	643,800	655,400	551,500	317,700
Interest expense (ttm)	US$ in thousands	438,400	345,600	327,300	305,400	279,600	291,300	248,600	209,700	176,300	150,700	135,300	122,900	118,700	121,400	127,100	139,100	157,500	177,300	201,700	227,300
Interest coverage		2.86	3.46	3.72	4.61	5.48	5.57	7.06	9.00	11.23	13.92	15.43	16.89	16.02	13.12	10.72	8.84	4.09	3.70	2.73	1.40

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,251,800K ÷ $438,400K
= 2.86

AutoNation Inc's interest coverage ratio has shown a generally improving trend from March 31, 2020, to December 31, 2022, indicating the company's ability to comfortably meet its interest payment obligations. The interest coverage ratio increased steadily from 1.40 on March 31, 2020, to a peak of 16.89 on March 31, 2022, before experiencing a slight decline.

The ratio remained above 1 throughout the period, suggesting that AutoNation's earnings were consistently sufficient to cover its interest expenses. The peak ratio of 16.89 on March 31, 2022, indicates that the company's operating income was almost 17 times higher than its interest expenses during that period, reflecting a strong financial position.

However, the interest coverage ratio began declining from June 30, 2022, to December 31, 2024, potentially signaling a decrease in earnings relative to interest expenses. By December 31, 2024, the interest coverage ratio had decreased to 2.86, indicating that AutoNation's ability to cover interest expenses had weakened compared to earlier periods.

Overall, while AutoNation's interest coverage ratio fluctuated over the analyzed period, it remained above 1, signaling that the company's earnings were generally sufficient to cover its interest payments. Monitoring future trends in the interest coverage ratio will be important to assess AutoNation's financial health and ability to manage its debt obligations effectively.