Name: Interest Coverage

Definition: Interest coverage tells you how easily the company can pay interest on its debt using operating profits. It’s like asking: “Can the company comfortably make its loan payments, or is it barely scraping by?” The higher the ratio, the safer. A very low ratio means debt payments may strain the business, especially if profits drop.

Interpretation:
• In '2021', DAN's interest coverage was 2.86, indicating the firm's ability to meet its interest obligations. Industry average for Auto Parts:O.E.M. in '2021' stood at 4.58.
• In '2022', DAN's interest coverage was 0.76, indicating the firm's ability to meet its interest obligations. The decline from '2021' may indicate some operational or financial challenges. Industry average for Auto Parts:O.E.M. in '2022' stood at 3.34. Industry average declined by 1.24 from previous year.
• In '2023', DAN's interest coverage was 2.16, indicating the firm's ability to meet its interest obligations. The increase since '2022' reflects strengthening financial performance. Industry average for Auto Parts:O.E.M. in '2023' stood at 3.43. Industry average increased by 0.09 compared to previous year.
• In '2024', DAN's interest coverage was 1.50, indicating the firm's ability to meet its interest obligations. The decline from '2023' may indicate some operational or financial challenges. Industry average for Auto Parts:O.E.M. in '2024' stood at 2.65. Industry average declined by 0.78 from previous year.
Overall, DAN's interest coverage has been volatile but showed a downward trend over the past 4 years.

Formula: Interest Coverage = EBIT / Interest Expense

Good Range: Minimum 3-5 desirable; below 1 is risky.