Sonic Automotive Inc (SAH)

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 461,500 429,500 453,300 423,900 423,600 178,000 189,500 266,000 314,000 617,800 594,300 604,900 538,400 484,498 455,531 343,675 33,900 20,318 -10,919 -1,490
Interest expense (ttm) US$ in thousands 5,800 140,300 139,500 139,100 138,500 128,800 122,700 115,100 107,000 94,077 80,994 69,771 58,979 44,156 46,431 47,488 49,246 53,117 55,343 59,176
Interest coverage 79.57 3.06 3.25 3.05 3.06 1.38 1.54 2.31 2.93 6.57 7.34 8.67 9.13 10.97 9.81 7.24 0.69 0.38 -0.20 -0.03

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $461,500K ÷ $5,800K
= 79.57

The interest coverage ratio for Sonic Automotive Inc has shown significant fluctuations over the years based on the provided data. The interest coverage ratio is a measure of a company's ability to pay interest expenses on its outstanding debt.

From March 31, 2020, to December 31, 2020, the interest coverage ratio was consistently below 1, indicating that the company was not generating enough operating income to cover its interest expenses. This could raise concerns about the company's financial stability and ability to meet its debt obligations.

Starting from March 31, 2021, the interest coverage ratio showed a notable improvement, with a substantial increase in each subsequent quarter until December 31, 2021. This improvement suggests that Sonic Automotive Inc's operating income was sufficient to cover its interest expenses during this period.

However, from March 31, 2022, to December 31, 2024, the interest coverage ratio declined gradually, indicating a potential reduction in the company's ability to cover its interest payments. The sharp increase in the ratio from December 31, 2024, to 79.57 could potentially indicate a significant improvement in the company's profitability and ability to service its debt.

Overall, the trend in Sonic Automotive Inc's interest coverage ratio shows variability in its ability to meet interest expenses, with periods of both weakness and strength. It would be important for stakeholders to monitor this ratio closely to assess the company's financial health and ability to manage its debt obligations effectively.