Builders FirstSource Inc (BLDR)

Interest coverage

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	1,595,250	2,176,320	3,770,210	2,387,420	543,854
Interest expense	US$ in thousands	207,724	192,115	198,373	135,877	135,688
Interest coverage		7.68	11.33	19.01	17.57	4.01

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $1,595,250K ÷ $207,724K
= 7.68

Builders FirstSource Inc's interest coverage ratio has shown a generally positive trend over the years, indicating the company's ability to meet its interest obligations comfortably.

As of December 31, 2020, the interest coverage ratio was 4.01, suggesting that the company's operating income was able to cover its interest expenses by approximately four times.

This ratio improved significantly to 17.57 as of December 31, 2021, indicating a substantial increase in the company's ability to cover its interest payments from its operating income.

Continuing the trend, the interest coverage ratio further increased to 19.01 as of December 31, 2022, reflecting a strong ability to meet interest obligations with operating income.

However, there was a slight decline in the interest coverage ratio to 11.33 as of December 31, 2023. While this ratio is still considered healthy, it represents a decrease from the previous year.

As of December 31, 2024, the interest coverage ratio further decreased to 7.68. This decrease suggests that the company may have experienced challenges in covering its interest expenses with operating income compared to the prior year.

Overall, the trend in the interest coverage ratios of Builders FirstSource Inc indicates that the company has had varying levels of ability to meet its interest obligations over the years, with overall improvements in coverage until the most recent two years where some decline was observed. Monitoring this ratio is essential for assessing the company's financial health and ability to service its debt obligations in the future.