Generac Holdings Inc (GNRC)
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 | 498,488 | 485,408 | 419,815 | 404,009 | 385,413 | 338,157 | 319,023 | 445,178 | 553,924 | 622,858 | 709,641 | 678,340 | 718,404 | 717,281 | 700,236 | 611,667 | 482,540 | 403,776 | 355,002 | 353,689 |
| Interest expense (ttm) | US$ in thousands | 89,713 | 94,598 | 96,395 | 98,237 | 97,627 | 92,385 | 83,192 | 68,267 | 54,826 | 44,832 | 37,298 | 34,784 | 32,953 | 31,334 | 31,450 | 31,661 | 32,991 | 35,197 | 37,805 | 40,325 |
| Interest coverage | 5.56 | 5.13 | 4.36 | 4.11 | 3.95 | 3.66 | 3.83 | 6.52 | 10.10 | 13.89 | 19.03 | 19.50 | 21.80 | 22.89 | 22.27 | 19.32 | 14.63 | 11.47 | 9.39 | 8.77 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $498,488K ÷ $89,713K
= 5.56
Generac Holdings Inc's interest coverage ratio has shown fluctuations over the data range provided. The interest coverage ratio measures the company's ability to cover its interest expenses with its earnings before interest and taxes (EBIT). A higher interest coverage ratio indicates that the company has more earnings to cover its interest payments.
From March 31, 2020, to September 30, 2021, Generac Holdings Inc's interest coverage steadily increased from 8.77 to 22.89, which indicates a strong ability to meet its interest obligations with its operating profits. However, from March 31, 2022, onwards, the interest coverage ratio began to decline, dropping to 5.13 by September 30, 2024.
The significant decrease in the interest coverage ratio after September 2021 may raise concerns about the company's ability to comfortably meet its interest expenses from its operating earnings. It suggests a potential increase in financial risk as the company's ability to cover its interest payments declined.
Overall, close monitoring of Generac Holdings Inc's interest coverage ratio is important to assess its financial health and ability to manage its debt obligations effectively. A declining trend in the ratio may indicate a need for the company to reassess its debt levels or improve its operational efficiency to ensure sustainable financial performance.
Peer comparison
Dec 31, 2024