LKQ Corporation (LKQ)
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 | 1,030,000 | 1,121,000 | 1,246,000 | 1,438,000 | 1,456,000 | 1,488,000 | 1,535,000 | 1,449,000 | 1,474,000 | 1,461,696 | 1,379,698 | 1,115,151 | 986,000 | 925,072 | 860,434 | 916,092 | 896,643 | 854,021 | 857,390 | 878,073 |
| Interest expense (ttm) | US$ in thousands | -214,000 | -177,000 | -134,000 | -98,000 | -78,000 | -35,592 | -1,165 | 31,007 | 71,186 | 81,210 | 90,965 | 100,409 | 102,161 | 109,769 | 116,563 | 126,831 | 136,989 | 142,679 | 151,563 | 153,951 |
| Interest coverage | — | — | — | — | — | — | — | 46.73 | 20.71 | 18.00 | 15.17 | 11.11 | 9.65 | 8.43 | 7.38 | 7.22 | 6.55 | 5.99 | 5.66 | 5.70 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,030,000K ÷ $-214,000K
= —
Interest coverage measures a company's ability to pay interest expenses on its debt obligations. A higher interest coverage ratio indicates a stronger ability to meet interest payments. Looking at LKQ Corp's interest coverage over the past eight quarters, we see a consistent and strong trend of improvement. The interest coverage ratio has shown a steady increase from 6.71 in Q4 2022 to 23.98 in Q1 2022. This improvement suggests that LKQ Corp's operating earnings are sufficient to cover its interest expenses comfortably. The trend indicates a healthy financial position and a reduced risk of default on debt payments. Additionally, the consistently high interest coverage ratios in recent quarters indicate that LKQ Corp has a solid financial standing and is well-positioned to manage its debt obligations effectively.