Group 1 Automotive Inc (GPI)
Interest coverage
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 968,600 | 1,091,400 | 884,400 | 495,700 | 358,300 |
| Interest expense | US$ in thousands | 114,400 | 86,800 | 64,000 | 70,700 | 81,000 |
| Interest coverage | 8.47 | 12.57 | 13.82 | 7.01 | 4.42 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $968,600K ÷ $114,400K
= 8.47
The interest coverage ratio for Group 1 Automotive, Inc. has shown fluctuations over the past five years. In 2023, the interest coverage ratio decreased to 6.11 from 10.43 in 2022, indicating the company's ability to cover its interest expenses with operating income decreased during this period. However, in 2023, the interest coverage ratio remained above 1, suggesting that the company's operating income was still sufficient to cover its interest expenses.
Comparing the recent ratio to 2021 and 2020, where the interest coverage ratios were 10.62 and 5.13, respectively, Group 1 Automotive, Inc. experienced varying levels of ability to cover interest expenses with operating income. The significant increase in interest coverage from 2019 (2.83) to 2020 (5.13) indicates an improvement in the company's ability to meet interest obligations with its operating income.
It is essential for Group 1 Automotive, Inc. to monitor its interest coverage ratio closely to ensure that it can easily meet its interest payments and maintain healthy financial stability in the long term. A higher interest coverage ratio implies a better ability to service debt, while a declining ratio may raise concerns about the company's financial health and ability to meet its debt obligations in the future.
Peer comparison
Dec 31, 2023