Lear Corporation (LEA)
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 | 914,400 | 929,800 | 927,700 | 726,400 | 698,000 | 694,300 | 659,600 | 730,300 | 607,900 | 496,700 | 353,500 | 475,400 | 675,300 | 884,600 | 1,109,800 | 567,100 | 398,900 | 258,900 | 288,200 | 870,700 |
| Interest expense (ttm) | US$ in thousands | 106,200 | 104,500 | 103,700 | 103,000 | 101,100 | 100,100 | 99,200 | 97,900 | 98,600 | 99,200 | 97,000 | 94,400 | 91,800 | 88,700 | 92,600 | 97,500 | 99,600 | 100,700 | 98,200 | 95,500 |
| Interest coverage | 8.61 | 8.90 | 8.95 | 7.05 | 6.90 | 6.94 | 6.65 | 7.46 | 6.17 | 5.01 | 3.64 | 5.04 | 7.36 | 9.97 | 11.98 | 5.82 | 4.01 | 2.57 | 2.93 | 9.12 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $914,400K ÷ $106,200K
= 8.61
The interest coverage ratio measures a company's ability to meet interest payments on its outstanding debt. It is calculated by dividing earnings before interest and taxes (EBIT) by the interest expense incurred.
Analyzing the interest coverage ratio of Lear Corporation based on the provided data indicates fluctuations in the company's ability to cover its interest obligations over the specified period. In March 2020, Lear Corporation had an interest coverage ratio of 9.12, indicating that the company's EBIT was sufficient to cover its interest payments over nine times.
Subsequently, there was a significant decrease in the interest coverage ratio in June 2020 and September 2020, with values of 2.93 and 2.57, respectively. This suggests a potential strain on Lear Corporation's ability to cover its interest expenses during that time.
However, there was an improvement in the interest coverage ratio in the following quarters, with a notable increase to 11.98 in June 2021, indicating a stronger ability to meet interest obligations. The ratio remained relatively stable in the subsequent quarters, hovering around 6 to 9, indicating a reasonable ability to cover interest payments.
Overall, Lear Corporation's interest coverage ratio displayed fluctuations over the analyzed period, potentially reflecting changes in the company's financial performance and ability to service its debt obligations. It is essential for investors and stakeholders to closely monitor these ratios to assess the company's financial health and debt repayment capacity.
Peer comparison
Dec 31, 2024