CarGurus (CARG)

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	147,913	69,182	54,791	35,772	20,810	78,843	84,662	90,574	103,105	115,115	126,114	140,548	139,291	126,542	133,222	106,713	96,136	77,930	44,067	38,906
Interest expense (ttm)	US$ in thousands	0	8,604	8,604	8,604	17,208	68,391	156,731	185,284	177,633	117,872	29,532	979	26	22	196	513	1,075	1,053	879	562
Interest coverage		—	8.04	6.37	4.16	1.21	1.15	0.54	0.49	0.58	0.98	4.27	143.56	5,357.35	5,751.91	679.70	208.02	89.43	74.01	50.13	69.23

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $147,913K ÷ $0K
= —

The interest coverage ratio measures a company's ability to cover its interest expenses with its earnings before interest and taxes (EBIT). A higher ratio indicates that the company is more capable of meeting its interest obligations.

Looking at the data provided for CarGurus, we can observe fluctuations in the interest coverage ratio over time. From March 2020 to June 2021, the interest coverage ratio showed a generally increasing trend, reaching a peak of 679.70 in June 2021. This indicates that CarGurus was generating significantly more earnings relative to its interest expenses during this period.

However, starting from September 2021, the interest coverage ratio saw a drastic spike to 5,751.91, followed by a significant decline to 0.58 by December 2022. This extreme fluctuation suggests that there may have been irregularities or anomalies impacting the company's financial performance during this period.

From March 2023 to December 2024, the interest coverage ratio remained relatively low, ranging from 0.49 to 8.04. A low interest coverage ratio could signal potential financial distress, indicating that CarGurus may be struggling to cover its interest expenses with its operating earnings.

In conclusion, the interest coverage ratio for CarGurus has shown significant fluctuations over the period analyzed, indicating varying levels of financial strength and stability in meeting its interest obligations. Investors and stakeholders should closely monitor this ratio to assess the company's ability to manage its debt and evaluate its overall financial health.