Genuine Parts Co (GPC)
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 | 1,272,800 | 1,806,820 | 1,646,490 | 1,262,500 | 1,001,760 |
| Interest expense | US$ in thousands | 96,827 | 64,469 | 73,887 | 62,150 | 91,048 |
| Interest coverage | 13.15 | 28.03 | 22.28 | 20.31 | 11.00 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,272,800K ÷ $96,827K
= 13.15
Genuine Parts Co has shown a positive trend in its interest coverage ratio over the past five years. The interest coverage ratio measures the company's ability to pay interest expenses on its outstanding debt.
In December 2020, the interest coverage ratio was 11.00, indicating that the company earned 11 times the amount needed to cover its interest payments. This ratio increased significantly to 20.31 in December 2021, demonstrating a stronger ability to cover interest expenses.
The trend continued to improve in December 2022 and December 2023 with interest coverage ratios of 22.28 and 28.03 respectively, reflecting the company's robust financial position and its ability to comfortably meet its interest obligations.
However, there was a slight decrease in the interest coverage ratio to 13.15 in December 2024. While this decrease may raise some concerns, the ratio is still at a level that suggests Genuine Parts Co can afford its interest payments.
Overall, Genuine Parts Co has shown a consistent improvement in its interest coverage ratio over the years, indicating a solid financial standing and a reduced risk of default on its debt obligations.