O’Reilly Automotive Inc (ORLY)

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	3,186,376	3,149,857	3,056,829	3,001,606	2,954,491	2,948,155	2,898,560	2,895,593	2,917,168	2,775,559	2,745,973	2,686,880	2,419,336	2,326,567	2,137,917	1,899,501	1,920,726	1,907,263	1,856,048	1,837,124
Interest expense (ttm)	US$ in thousands	208,868	193,351	185,154	172,951	163,220	157,121	148,830	149,103	151,768	158,585	165,380	169,446	171,326	171,065	165,255	158,070	152,975	145,255	140,979	137,303
Interest coverage		15.26	16.29	16.51	17.36	18.10	18.76	19.48	19.42	19.22	17.50	16.60	15.86	14.12	13.60	12.94	12.02	12.56	13.13	13.17	13.38

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $3,186,376K ÷ $208,868K
= 15.26

O`Reilly Automotive, Inc.'s interest coverage ratio has shown a consistent and healthy trend over the past eight quarters, with values ranging from 16.19 to 20.75. The interest coverage ratio measures the company's ability to meet its interest payments on debt obligations with its operating income, and higher values indicate a stronger ability to cover interest expenses.

The interest coverage ratio has been comfortably above 1, indicating that O`Reilly Automotive, Inc. generates sufficient operating income to cover its interest obligations. The consistent values above 16 suggest the company has a robust ability to meet its interest payments, reducing the risk of default due to insufficient cash flows. This trend reflects positively on the company's financial health and ability to manage its debt effectively.

The increasing trend in the interest coverage ratio from Q4 2022 to Q1 2023 indicates improving financial strength and profitability, as the company's operating income has been consistently outpacing its interest expenses. This suggests that O`Reilly Automotive, Inc. is efficiently managing its debt levels and generating sufficient earnings to comfortably cover its interest costs, which bodes well for its long-term financial sustainability.