Dorman Products Inc (DORM)

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	216,564	171,783	171,928	136,335	106,038
Interest expense	US$ in thousands	48,061	15,582	2,162	599	231
Interest coverage		4.51	11.02	79.52	227.60	459.04

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $216,564K ÷ $48,061K
= 4.51

Interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt obligations. A higher ratio indicates that the company is better positioned to cover its interest expenses.

Dorman Products Inc's interest coverage ratio has fluctuated over the past five years, ranging from 4.47 in 2023 to 79.35 in 2021. The significant drop in the ratio from 2021 to 2023 indicates a decrease in the company's ability to cover its interest expenses. It went from a robust coverage of nearly 80 times in 2021 to 4.47 times in 2023, which might raise concerns about the company's ability to meet its interest obligations comfortably.

However, it's important to note the absence of data for 2020 and 2019, which limits the trend analysis over a longer period. In conclusion, while the company's recent interest coverage ratio has declined, further analysis and comparison with industry benchmarks would provide a clearer picture of Dorman Products Inc's financial health and ability to manage its debt obligations effectively.