Rush Enterprises A Inc (RUSHA)

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	468,386	477,190	477,834	495,867	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
Interest expense (ttm)	US$ in thousands	70,858	71,380	67,910	60,684	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
Interest coverage		6.61	6.69	7.04	8.17	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

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $468,386K ÷ $70,858K
= 6.61

Rush Enterprises A Inc's interest coverage ratio has shown a positive trend over the past few years, indicating the company's ability to meet its interest payments from its operating income.

The interest coverage ratio has steadily increased from 7.15 as of March 31, 2020, to a peak of 130.25 as of December 31, 2021. This significant improvement suggests that Rush Enterprises A Inc's earnings have been more than sufficient to cover its interest expenses, providing a cushion against potential financial distress.

However, the interest coverage ratio has shown a declining trend since reaching its peak in December 2021, dropping to 6.61 as of December 31, 2024. Although the ratio remains above 1, indicating that the company is still generating enough earnings to cover its interest obligations, the decreasing trend warrants attention as it may signal potential challenges in meeting future interest payments if not managed effectively.

Overall, Rush Enterprises A Inc's interest coverage ratio has exhibited both strength and some recent weakening, emphasizing the importance of monitoring the company's financial performance closely to ensure sustainability and financial health.