Patrick Industries Inc (PATK)

Interest coverage

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	218,448	275,764	272,422	263,308	260,200	270,511	292,197	390,649	496,170	523,235	523,747	444,986	351,712	319,179	285,735	202,575	173,373	147,191	124,772	157,895
Interest expense (ttm)	US$ in thousands	79,470	75,802	72,631	70,548	68,942	69,393	67,816	64,358	60,760	61,685	61,819	61,597	57,890	52,376	47,447	43,688	43,001	42,214	40,310	38,125
Interest coverage		2.75	3.64	3.75	3.73	3.77	3.90	4.31	6.07	8.17	8.48	8.47	7.22	6.08	6.09	6.02	4.64	4.03	3.49	3.10	4.14

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $218,448K ÷ $79,470K
= 2.75

The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt. It is calculated as Earnings Before Interest and Taxes (EBIT) divided by Interest Expenses.

For Patrick Industries Inc, the interest coverage ratio fluctuated over the reporting periods. From March 2020 to June 2022, the interest coverage ratio showed a consistent upward trend, indicating an improvement in the company's ability to cover its interest expenses. This increase suggests that the company's earnings were sufficient to cover its interest payments.

However, starting from March 2023, the interest coverage ratio began to decline, signaling a potential decrease in the company's ability to meet its interest obligations with its current level of earnings. By December 2024, the interest coverage ratio dropped significantly to 2.75, reflecting a potential deterioration in the company's financial health with regards to its ability to cover interest expenses.

It is crucial for stakeholders to closely monitor this ratio as a declining trend may indicate increased financial risk for the company, potentially impacting its creditworthiness and ability to secure financing at favorable terms in the future.