Penske Automotive Group Inc (PAG)

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	1,351,500	1,421,300	1,452,500	1,459,300	1,487,800	1,508,600	1,523,700	1,538,800	1,356,400	1,242,600	1,149,000	817,700	704,500	614,800	500,000	600,400	652,700	636,500	631,000	647,900
Interest expense (ttm)	US$ in thousands	92,600	88,500	81,900	74,700	70,400	66,200	64,500	75,100	86,000	108,800	131,400	143,900	165,900	179,600	195,100	206,400	208,700	207,300	201,500	198,600
Interest coverage		14.60	16.06	17.74	19.54	21.13	22.79	23.62	20.49	15.77	11.42	8.74	5.68	4.25	3.42	2.56	2.91	3.13	3.07	3.13	3.26

December 31, 2023 calculation

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

The interest coverage ratio for Penske Automotive Group Inc has demonstrated a declining trend over the past eight quarters. In Q4 2022, the company had an interest coverage ratio of 16.14, which subsequently decreased to 7.47 in Q4 2023. This indicates that the company's ability to cover its interest expenses with its earnings has weakened over time. However, it is important to note that despite the decline, the interest coverage ratio remains above 1, which suggests that the company is still generating enough operating income to cover its interest obligations. An interest coverage ratio of 7.47 in Q4 2023 implies that the company's operating income is sufficient to cover its interest expenses 7.47 times over, indicating a moderate level of financial stability in servicing its debt.