KAR Auction Services Inc (KAR)
Interest coverage
Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 299,100 | 259,200 | 247,200 | 17,300 | 6,200 | 2,600 | -12,200 | 184,400 | 139,800 | 126,900 | 106,900 | 136,400 | 228,100 | 197,200 | 254,700 | 196,900 | 134,300 | 188,400 | 186,400 | 284,100 |
Interest expense (ttm) | US$ in thousands | 203,000 | 151,700 | 155,800 | 157,200 | 155,800 | 151,900 | 144,800 | 131,900 | 119,200 | 116,100 | 116,000 | 121,300 | 126,600 | 124,800 | 122,100 | 121,800 | 128,900 | 137,900 | 146,300 | 171,000 |
Interest coverage | 1.47 | 1.71 | 1.59 | 0.11 | 0.04 | 0.02 | -0.08 | 1.40 | 1.17 | 1.09 | 0.92 | 1.12 | 1.80 | 1.58 | 2.09 | 1.62 | 1.04 | 1.37 | 1.27 | 1.66 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $299,100K ÷ $203,000K
= 1.47
Interest coverage ratio is a financial metric used to evaluate a company's ability to cover its interest expenses with its operating income.
Analyzing the interest coverage ratio of KAR Auction Services Inc over the period from March 31, 2020, to December 31, 2024, reveals fluctuations in the company's ability to meet its interest payment obligations.
Initially, the interest coverage ratio was 1.66 on March 31, 2020, indicating that KAR Auction Services Inc was generating enough operating income to cover its interest expenses. However, there was a decline in the ratio to 1.04 by December 31, 2020, suggesting a potential strain on the company's ability to meet its interest payments.
The trend continued as the ratio fluctuated over the subsequent quarters, with some improvements seen periodically. Notably, there was a significant improvement in the interest coverage ratio to 2.09 on June 30, 2021, indicating better earnings relative to interest expenses.
However, by June 30, 2022, the interest coverage ratio dropped to 0.92, falling below 1 which may indicate potential financial distress and difficulty in meeting interest obligations with operating income.
There were further fluctuations in the interest coverage ratio over the following quarters, with some periods showing improvements and others indicating challenges.
By December 31, 2024, the interest coverage ratio stood at 1.47, suggesting a moderate improvement compared to previous periods but still a level of risk as it is below the ideal ratio of 2 or higher.
Overall, the analysis of KAR Auction Services Inc's interest coverage ratio indicates variability in the company's ability to cover its interest expenses with operating income over the period under consideration, highlighting the importance of monitoring this metric for financial health assessment.
Peer comparison
Dec 31, 2024