Avis Budget Group Inc (CAR)
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 | 2,207,000 | 3,894,000 | 1,928,000 | -725,000 | 465,000 |
| Interest expense | US$ in thousands | 296,000 | 250,000 | 218,000 | 231,000 | 178,000 |
| Interest coverage | 7.46 | 15.58 | 8.84 | -3.14 | 2.61 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $2,207,000K ÷ $296,000K
= 7.46
Avis Budget Group Inc's interest coverage ratio has fluctuated over the past five years. In 2023, the interest coverage ratio was 2.88, indicating that the company's operating income was sufficient to cover its interest expenses approximately 2.88 times. This represents a decrease from 2022, where the ratio was 6.61, suggesting a lower level of financial flexibility in 2023.
Compared to 2021, when the interest coverage ratio was 4.60, the company's ability to cover interest payments decreased in 2023. Notably, in 2020, the interest coverage ratio was in negative territory at -0.50, indicating that the company's operating income was insufficient to cover its interest expenses during that year.
However, there has been an improvement from 2019, when the interest coverage ratio was 1.75. Overall, although the current ratio of 2.88 is a positive sign, investors and creditors may still want to monitor Avis Budget Group's ability to generate enough operating income to comfortably cover its interest expenses in the future.
Peer comparison
Dec 31, 2023