Lithia Motors Inc (LAD)
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 | 1,575,600 | 1,692,400 | 1,941,100 | 1,662,500 | 692,700 |
| Interest expense | US$ in thousands | 263,200 | 207,900 | 135,400 | 114,400 | 78,100 |
| Interest coverage | 5.99 | 8.14 | 14.34 | 14.53 | 8.87 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,575,600K ÷ $263,200K
= 5.99
Interest coverage ratio indicates the company's ability to meet interest obligations from its earnings. Lithia Motors Inc's interest coverage ratio has shown a positive trend over the past few years. As of December 31, 2020, the interest coverage ratio was 8.87, indicating that the company earned 8.87 times the amount needed to cover its interest expenses.
The ratio improved significantly by December 31, 2021, reaching 14.53, demonstrating an even stronger ability to cover interest payments. This positive trend continued into December 31, 2022, with an interest coverage ratio of 14.34.
However, there was a slight decline in the interest coverage ratio by December 31, 2023, dropping to 8.14. Although still above 1, this may signal a potential decrease in the company's ability to cover interest costs.
By December 31, 2024, the interest coverage ratio fell further to 5.99, indicating that the company's earnings may be less able to cover its interest expenses. This decreasing trend in the interest coverage ratio may raise concerns about the company's financial health and ability to meet its debt obligations comfortably. Further analysis and monitoring of Lithia Motors Inc's financial performance are recommended to assess the impact of these changes on its overall financial sustainability.
Peer comparison
Dec 31, 2024