Penske Automotive Group Inc (PAG)

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	1,351,500	1,487,800	1,356,400	704,500	652,700
Interest expense	US$ in thousands	92,600	70,400	68,600	111,000	208,700
Interest coverage		14.60	21.13	19.77	6.35	3.13

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $1,351,500K ÷ $92,600K
= 14.60

Interest coverage ratio is a measure of a company's ability to meet its interest payments on outstanding debt. It is calculated by dividing the earnings before interest and taxes (EBIT) by the interest expense. A higher interest coverage ratio indicates a better ability to cover interest payments.

For Penske Automotive Group Inc, the interest coverage ratio has fluctuated over the past five years, as follows:
- Dec 31, 2019: 3.83
- Dec 31, 2020: 5.27
- Dec 31, 2021: 18.26
- Dec 31, 2022: 16.14
- Dec 31, 2023: 7.47

The trend shows an improvement in the interest coverage ratio from 2019 to 2022, indicating a strengthening ability to cover interest obligations. However, there was a slight decrease in 2023 compared to 2022, which may warrant further analysis to understand the reasons behind this change.

Overall, Penske Automotive Group Inc has demonstrated a relatively healthy interest coverage ratio over the past five years, with the company being able to comfortably cover its interest payments.