Aptiv PLC (APTV)
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 | 2,394,000 | 2,166,000 | 2,055,000 | 1,346,000 | 1,250,000 | 1,335,000 | 1,361,000 | 1,044,000 | 934,000 | 665,000 | 409,000 | 611,000 | 841,000 | 1,167,000 | 1,340,000 | 775,000 | 2,017,000 | 1,925,000 | 1,916,000 | 2,600,000 |
| Interest expense (ttm) | US$ in thousands | 337,000 | 80,000 | 275,000 | 283,000 | 285,000 | 276,000 | 259,000 | 243,000 | 219,000 | 193,000 | 171,000 | 153,000 | 150,000 | 153,000 | 155,000 | 161,000 | 164,000 | 166,000 | 170,000 | 169,000 |
| Interest coverage | 7.10 | 27.08 | 7.47 | 4.76 | 4.39 | 4.84 | 5.25 | 4.30 | 4.26 | 3.45 | 2.39 | 3.99 | 5.61 | 7.63 | 8.65 | 4.81 | 12.30 | 11.60 | 11.27 | 15.38 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $2,394,000K ÷ $337,000K
= 7.10
The interest coverage ratio measures a company's ability to cover its interest payments with its earnings before interest and taxes (EBIT). A higher interest coverage ratio is generally favorable as it indicates the company is more capable of servicing its debt obligations.
In the case of Aptiv PLC, the interest coverage ratio has fluctuated over the provided periods, ranging from a high of 27.08 for the quarter ending September 30, 2024, to a low of 2.39 for the quarter ending June 30, 2022. These fluctuations suggest variability in the company's ability to cover its interest payments.
Specifically, a ratio above 1 indicates the company can cover its interest payments, with higher ratios indicating stronger coverage. Aptiv's interest coverage ratios have generally been above 1 during the period, indicating that the company has been able to cover its interest expenses with its operating earnings.
However, the declining trend in the interest coverage ratio from a peak of 27.08 in September 30, 2024, to 4.39 in December 31, 2023, and then to 4.76 in March 31, 2024, raises some concerns. The decreasing trend in the ratio may indicate a potentially increasing financial risk for the company in terms of its ability to meet interest payment obligations with its operating profits.
While Aptiv PLC has shown fluctuations in its interest coverage ratio, it is essential to closely monitor this metric in conjunction with other financial indicators to assess the company's overall financial health and its ability to service its debt obligations effectively.
Peer comparison
Dec 31, 2024