Rush Enterprises A Inc (RUSHA)
Interest coverage
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Earnings before interest and tax (EBIT) | US$ in thousands | 469,022 | 514,749 | 528,387 | 316,110 | 161,450 |
Interest expense | US$ in thousands | 72,024 | 53,694 | 19,763 | 2,427 | 9,727 |
Interest coverage | 6.51 | 9.59 | 26.74 | 130.25 | 16.60 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $469,022K ÷ $72,024K
= 6.51
Interest coverage is a key financial ratio that indicates a company's ability to meet its interest obligations on outstanding debt. It is calculated by dividing earnings before interest and taxes (EBIT) by the company's interest expenses. In the case of Rush Enterprises A Inc, the interest coverage ratio has shown some fluctuations over the past five years.
As of December 31, 2020, Rush Enterprises A Inc had an interest coverage ratio of 16.60, indicating that the company generated 16.60 times the amount of earnings needed to cover its interest expenses. This suggests a relatively healthy financial position and the ability to comfortably meet its interest payments.
By December 31, 2021, the interest coverage ratio significantly improved to 130.25, reflecting a substantial increase in earnings relative to interest expenses. This sharp improvement indicates a strong financial performance and a reduced risk of default on debt obligations.
In the following years, the interest coverage ratio showed some fluctuations, with ratios of 26.74 on December 31, 2022, 9.59 on December 31, 2023, and 6.51 on December 31, 2024. These lower ratios suggest that Rush Enterprises A Inc may have experienced challenges in generating sufficient earnings to cover its interest expenses during those periods.
Overall, a high interest coverage ratio indicates a lower risk of financial distress, while a declining ratio may signal potential financial difficulties. It is essential for investors and analysts to closely monitor changes in the interest coverage ratio to assess the company's financial health and ability to manage its debt obligations effectively.
Peer comparison
Dec 31, 2024