Standard Motor Products Inc (SMP)
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 | 87,501 | 92,631 | 108,949 | 132,493 | 109,707 |
Interest expense | US$ in thousands | 13,512 | 13,287 | 10,617 | 2,028 | 2,328 |
Interest coverage | 6.48 | 6.97 | 10.26 | 65.33 | 47.12 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $87,501K ÷ $13,512K
= 6.48
Standard Motor Products Inc's interest coverage has shown a declining trend over the years. From a strong level of 47.12 at the end of December 2020, the interest coverage ratio increased to 65.33 by December 2021. However, there was a significant drop in the ratio to 10.26 by the end of December 2022, indicating that the company may have faced challenges in meeting its interest obligations compared to its operating income.
The trend continued downwards as the interest coverage further decreased to 6.97 by December 2023 and then to 6.48 by December 2024. These decreasing values suggest that Standard Motor Products Inc's ability to cover its interest expenses with its earnings has weakened significantly over the years.
The declining trend in interest coverage ratios raises concerns about the company's financial health and its ability to service its debt. Investors and creditors may view this trend negatively as it indicates a higher risk of default on debt obligations. Standard Motor Products Inc may need to closely monitor its interest coverage ratio and take appropriate measures to improve it in order to maintain financial stability and continue meeting its interest obligations comfortably.
Peer comparison
Dec 31, 2024