Cars.com Inc (CARS)

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	29,666	50,530	67,036	7,719	-909,653
Interest expense	US$ in thousands	32,197	32,425	35,320	38,729	37,856
Interest coverage		0.92	1.56	1.90	0.20	-24.03

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $29,666K ÷ $32,197K
= 0.92

The interest coverage ratio for Cars.com Inc, which measures the company's ability to pay its interest expenses with its operating income, has shown a fluctuating trend over the past five years.

As of December 31, 2020, the interest coverage was significantly negative at -24.03, indicating that the company's operating income was insufficient to cover its interest expenses. This raised concerns about the company's financial health and its ability to meet its debt obligations.

By December 31, 2021, there was a slight improvement in the interest coverage ratio to 0.20. While still low, this suggests a marginal increase in the company's ability to cover its interest costs with its operating income.

The trend continued to improve in the following years, with the interest coverage ratios for December 31, 2022, and December 31, 2023, reaching 1.90 and 1.56, respectively. These ratios indicate that the company's operating income was becoming more capable of meeting its interest payments.

However, by December 31, 2024, the interest coverage ratio decreased to 0.92, showing a slight deterioration in the company's ability to cover its interest expenses compared to the previous year.

Overall, while there has been some improvement in Cars.com Inc's ability to cover its interest expenses in recent years, the fluctuating trend underscores the importance of continuously monitoring the company's financial performance and managing its debt obligations.