AutoNation Inc (AN)

Interest coverage

		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	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	1,651,900	1,726,900	1,829,900	1,948,800	2,024,500	2,132,000	2,112,800	2,084,900	1,902,800	1,679,800	1,448,200	1,119,400	563,200	489,600	411,400	413,500	823,600	785,100	795,200	782,900
Interest expense (ttm)	US$ in thousands	200,600	188,900	173,800	161,900	150,400	133,000	123,400	110,200	101,800	97,100	96,600	98,900	101,200	98,800	103,500	108,000	112,300	114,200	114,300	116,300
Interest coverage		8.23	9.14	10.53	12.04	13.46	16.03	17.12	18.92	18.69	17.30	14.99	11.32	5.57	4.96	3.97	3.83	7.33	6.87	6.96	6.73

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,651,900K ÷ $200,600K
= 8.23

Autonation Inc.'s interest coverage has shown a declining trend over the past eight quarters. The interest coverage ratio, which measures the company's ability to meet interest payments on its debt obligations, has decreased from 16.79 in Q1 2022 to 5.08 in Q4 2023. This decline suggests that Autonation may be facing challenges in meeting its interest payments as its earnings are increasingly less able to cover its interest expenses.

While a higher interest coverage ratio indicates a company's ability to meet its interest obligations more comfortably, the decreasing trend raises concerns about the company's financial health and the sustainability of its current debt levels. It is important for Autonation to closely monitor its interest coverage ratio and take appropriate actions to improve it, such as reducing debt levels or increasing earnings, to ensure its long-term financial stability.