Sonic Automotive Inc (SAH)
Interest coverage
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 423,600 | 314,000 | 538,400 | 33,900 | 307,700 |
| Interest expense | US$ in thousands | 141,700 | 109,800 | 60,500 | 50,704 | 62,128 |
| Interest coverage | 2.99 | 2.86 | 8.90 | 0.67 | 4.95 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $423,600K ÷ $141,700K
= 2.99
The interest coverage ratio for Sonic Automotive, Inc. has fluctuated over the past five years. In 2023, the interest coverage ratio was 2.77, representing a decrease from the previous year. This indicates that the company's ability to cover its interest expenses with operating profits declined compared to 2022.
Looking back, the interest coverage ratio was the highest in 2021 at 8.32, showing a strong ability to meet interest obligations with operating income. However, the ratio decreased in 2022 and 2023, indicating a possible weakening financial position in terms of servicing debt.
Comparing to 2020 and 2019, the interest coverage ratio has improved, showing that Sonic Automotive, Inc. had better ability in those years to cover interest expenses with its operating profits.
Overall, a declining trend in the interest coverage ratio in recent years may raise concerns about the company's ability to service debt obligations. It suggests that Sonic Automotive, Inc. may be experiencing challenges in generating sufficient operating income to cover its interest expenses.
Peer comparison
Dec 31, 2023