O’Reilly Automotive Inc (ORLY)
Interest coverage
Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
---|---|---|---|---|---|---|
Earnings before interest and tax (EBIT) | US$ in thousands | 3,186,380 | 2,954,490 | 2,917,170 | 2,419,340 | 1,920,730 |
Interest expense | US$ in thousands | 208,868 | 163,220 | 151,768 | 171,326 | 152,975 |
Interest coverage | 15.26 | 18.10 | 19.22 | 14.12 | 12.56 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $3,186,380K ÷ $208,868K
= 15.26
O`Reilly Automotive, Inc.'s interest coverage ratio has exhibited a generally positive trend over the past five years. The interest coverage ratio measures the company's ability to meet its interest obligations on its debt using its operating income. A higher interest coverage ratio indicates a stronger ability to cover interest expenses.
In 2021, the company's interest coverage ratio was the highest at 20.43, indicating that O`Reilly Automotive had a comfortable cushion to cover its interest payments. This was followed by 2019 and 2022, with ratios of 13.98 and 19.32, respectively, which also demonstrated strong interest coverage.
Although there was a slight decrease in 2023 to 16.19, the ratio still remains at a level that provides confidence in the company's ability to meet its interest payments. In 2020, the ratio was 15.25, which was lower compared to the other years but still above the industry average.
Overall, the trend of increasing interest coverage ratios up to 2021 followed by a slight decrease in 2023 indicates that O`Reilly Automotive, Inc. has been effectively managing its interest obligations relative to its operating income. This suggests a sound financial position and ability to service its debt comfortably.
Peer comparison
Dec 31, 2023