Knight Transportation Inc (KNX)

Interest coverage

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	320,204	397,389	1,071,310	995,775	577,620
Interest expense	US$ in thousands	171,158	127,100	50,803	21,140	17,309
Interest coverage		1.87	3.13	21.09	47.10	33.37

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $320,204K ÷ $171,158K
= 1.87

In analyzing Knight Transportation Inc's interest coverage ratio over the past five years, we observe a generally positive trend followed by a notable decline in the most recent years.

As of December 31, 2020, the interest coverage ratio stood at a healthy 33.37, indicating the company's ability to comfortably cover its interest expenses with operating income. This was further strengthened by the ratio increasing to 47.10 by December 31, 2021, suggesting improved financial health and a stronger capacity to meet debt obligations.

However, a significant decline was noted by December 31, 2022, as the interest coverage ratio dropped to 21.09. This implies a potential strain on Knight Transportation Inc's ability to cover interest payments with operating income, signaling a riskier financial position.

The downward trend continued into the subsequent years, with the interest coverage ratio plummeting to 3.13 by December 31, 2023, and further deteriorating to 1.87 by December 31, 2024. These diminishing ratios indicate a heightened risk of financial distress, as the company may struggle to meet its interest obligations based on current operating income levels.

Overall, while Knight Transportation Inc initially exhibited strong interest coverage ratios, the subsequent downward trajectory raises concerns about its ability to effectively manage debt and service interest payments in the more recent years.