Dorman Products Inc (DORM)

Interest coverage

		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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	216,564	172,255	149,474	143,458	171,783	183,550	185,804	176,987	171,927	172,798	173,331	150,193	133,519	109,404	91,548	101,148	105,828	128,565	145,335	160,892
Interest expense (ttm)	US$ in thousands	48,061	47,175	37,304	26,304	15,582	6,384	4,773	3,271	2,161	971	301	238	117	63	0	0	0	0	0	0
Interest coverage		4.51	3.65	4.01	5.45	11.02	28.75	38.93	54.11	79.56	177.96	575.85	631.06	1,141.19	1,736.57	—	—	—	—	—	—

December 31, 2023 calculation

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

Interest coverage measures a company's ability to meet its interest obligations with its operating income. Looking at the trend for Dorman Products Inc's interest coverage over the past eight quarters, we observe a significant decline from 52.05 in Q1 2022 to 4.47 in Q4 2023. This decrease suggests a potential deterioration in the company's ability to cover its interest expenses with its operating income. The sharp fluctuations in interest coverage indicate volatility in the company's financial performance, with Q4 2022 showing a very high interest coverage ratio of 27.92 followed by a substantial drop in subsequent quarters.

The declining trend in interest coverage may raise concerns regarding Dorman Products Inc's financial stability and ability to service its debt obligations. It is essential for investors and stakeholders to closely monitor the company's financial health and assess the reasons behind the fluctuating interest coverage ratios to make informed decisions about the company's creditworthiness and overall performance.