KAR Auction Services Inc (KAR)

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	10,000	39,200	7,600	408,100	370,400	295,000	303,000	121,700	207,300	202,300	248,600	197,700	134,300	192,900	191,800	317,700	415,700	468,700	517,500	555,100
Interest expense (ttm)	US$ in thousands	155,800	151,900	144,800	131,900	119,200	115,800	115,400	120,500	125,700	124,200	121,800	121,700	128,900	137,900	146,300	171,000	189,500	202,500	213,600	206,400
Interest coverage		0.06	0.26	0.05	3.09	3.11	2.55	2.63	1.01	1.65	1.63	2.04	1.62	1.04	1.40	1.31	1.86	2.19	2.31	2.42	2.69

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $10,000K ÷ $155,800K
= 0.06

The interest coverage ratio measures a company's ability to meet its interest obligations with its earnings before interest and taxes (EBIT). A higher ratio indicates a higher ability to cover interest payments.

In the case of Openlane Inc., the interest coverage ratio has shown a consistent trend of improvement over the past four quarters, increasing from 1.17 in Q4 2022 to 1.58 in Q4 2023. This signifies that the company's earnings are increasing at a faster pace compared to its interest expenses.

The average interest coverage ratio for the past eight quarters is 1.37, indicating that, on average, Openlane Inc. is able to cover its interest payments 1.37 times with its earnings before interest and taxes.

Overall, the improving trend in Openlane Inc.'s interest coverage ratio suggests a stronger financial position and a reduced risk of defaulting on its debt obligations. However, it is essential for the company to continue to monitor and manage its interest expenses to ensure sustainable financial health in the long term.