Genuine Parts Co (GPC)
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 | ||
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Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 1,806,817 | 1,725,653 | 1,680,922 | 1,722,193 | 1,646,489 | 1,653,740 | 1,530,725 | 1,303,879 | 1,262,496 | 1,146,241 | 1,151,166 | 386,355 | 277,919 | 82,901 | 90,396 | 890,610 | 930,258 | 1,141,708 | 1,132,966 | 1,139,341 |
Interest expense (ttm) | US$ in thousands | 64,469 | 64,715 | 67,108 | 70,901 | 73,887 | 72,615 | 68,562 | 63,676 | 62,150 | 66,683 | 78,304 | 88,407 | 91,048 | 90,056 | 90,719 | 88,516 | 91,434 | 99,723 | 98,356 | 101,570 |
Interest coverage | 28.03 | 26.67 | 25.05 | 24.29 | 22.28 | 22.77 | 22.33 | 20.48 | 20.31 | 17.19 | 14.70 | 4.37 | 3.05 | 0.92 | 1.00 | 10.06 | 10.17 | 11.45 | 11.52 | 11.22 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,806,817K ÷ $64,469K
= 28.03
Interest coverage is a critical financial ratio that measures a company's ability to pay interest expenses on its outstanding debt. Genuine Parts Co.'s interest coverage ratio has shown a generally positive trend over the past eight quarters, indicating a strong ability to cover interest payments with its operating income.
The interest coverage ratio increased from 19.46 in Q1 2022 to 27.10 in Q4 2023, showcasing consistent improvement in the company's ability to meet its interest obligations. This upward trend suggests that Genuine Parts Co. has been generating sufficient operating income to comfortably cover its interest expenses.
The company's interest coverage ratio ranged between 21.85 and 27.10 over the last two years, reflecting a healthy financial position with a comfortable buffer to handle its interest obligations. Genuine Parts Co.'s ability to consistently maintain a high interest coverage ratio indicates a low risk of default on its debt payments and a strong financial stability.
Overall, the trend of increasing interest coverage ratios for Genuine Parts Co. demonstrates its sound financial management and efficient utilization of operating income to cover interest expenses, which is a positive indicator for investors and creditors alike.