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
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.