Generac Holdings Inc (GNRC)
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 | 498,488 | 385,413 | 553,924 | 718,404 | 482,540 |
| Interest expense | US$ in thousands | 89,713 | 97,627 | 54,826 | 32,953 | 32,991 |
| Interest coverage | 5.56 | 3.95 | 10.10 | 21.80 | 14.63 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $498,488K ÷ $89,713K
= 5.56
The interest coverage ratio measures a company's ability to meet its interest obligations from its operating income. A higher interest coverage ratio indicates a greater ability to cover interest payments using operating profits.
Analyzing the interest coverage ratios of Generac Holdings Inc over the years:
- As of December 31, 2020, the interest coverage ratio was 14.63, indicating that the company generated operating income 14.63 times higher than its interest expenses.
- The ratio improved significantly by December 31, 2021, reaching 21.80, reflecting a further strengthening of the company's ability to cover interest payments.
- However, by December 31, 2022, the interest coverage ratio decreased to 10.10, which may suggest a decline in operating income relative to interest expenses.
- The trend continued with a notable decrease in the ratio to 3.95 by December 31, 2023, potentially indicating a significant challenge in meeting interest obligations.
- By December 31, 2024, there was a slight improvement in the interest coverage ratio to 5.56, although it still remained relatively low compared to previous years.
Overall, the interest coverage ratios of Generac Holdings Inc have shown fluctuations over the years, with a peak in 2021 followed by a decline in subsequent years. It is essential for the company to closely monitor its operating income and interest expenses to ensure it maintains a healthy level of interest coverage for financial stability and creditor confidence.
Peer comparison
Dec 31, 2024