Rush Enterprises A Inc (RUSHA)

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	514,749	531,079	536,216	536,612	528,387	483,317	448,902	380,529	316,110	279,111	231,972	182,156	161,450	146,852	161,771	199,532	220,010	249,061	247,810	228,754
Interest expense (ttm)	US$ in thousands	53,694	46,516	38,597	29,527	19,763	12,523	6,519	3,139	2,427	2,262	3,044	5,465	9,727	15,398	22,035	27,898	30,487	30,910	27,688	24,110
Interest coverage		9.59	11.42	13.89	18.17	26.74	38.59	68.86	121.23	130.25	123.39	76.21	33.33	16.60	9.54	7.34	7.15	7.22	8.06	8.95	9.49

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $514,749K ÷ $53,694K
= 9.59

The interest coverage ratio for Rush Enterprises A Inc has displayed a fluctuating trend over the past few years, ranging from a low of 7.15 in March 2020 to a high of 130.25 in March 2022. The interest coverage ratio measures the company's ability to meet its interest obligations with its operating income. A higher ratio indicates a greater ability to cover interest expenses from operating profits.

Despite some volatility, the interest coverage ratio generally appears strong and well above 1, indicating that Rush Enterprises A Inc has consistently generated sufficient operating income to comfortably cover its interest payments. The ratio peaked in March 2022 at 130.25, indicating a robust ability to meet interest obligations, potentially reflecting strong profitability or lower interest expenses during that period.

The declining trend in the interest coverage ratio from March 2022 onwards, with a notable drop to 7.15 in March 2020, might raise some concerns about the ability of the company to cover its interest expenses adequately. Investors and creditors should keep a close eye on this trend to ensure the company maintains a healthy level of interest coverage in the future.