Builders FirstSource Inc (BLDR)

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	2,176,320	3,770,210	2,387,420	543,854	392,306
Interest expense	US$ in thousands	201	179	360	1,424	1,115
Interest coverage		10,827.46	21,062.63	6,631.72	381.92	351.84

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $2,176,320K ÷ $201K
= 10,827.46

Over the past five years, Builders Firstsource Inc's interest coverage ratio has displayed fluctuations, indicating the company's ability to meet its interest payment obligations from its earnings. The interest coverage ratio has generally been healthy, with a significant improvement observed from 2019 to 2020, followed by a consistent increase up to 2022. A high interest coverage ratio like the ones seen in 2022 and 2023 (19.01 and 11.33, respectively) suggests that the company is comfortably able to cover its interest expenses with its operating income. This indicates a lower financial risk for the company, as it has a strong ability to service its debt obligations. However, the slight decrease in 2023 compared to 2022 could be an area of concern, and it is important for stakeholders to monitor this trend in the coming periods.