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.