American Eagle Outfitters Inc (AEO)

Interest coverage

		Jan 31, 2025	Feb 3, 2024	Jan 31, 2024	Jan 31, 2023	Jan 28, 2023
Earnings before interest and tax (EBIT)	US$ in thousands	444,864	222,717	241,038	192,203	247,047
Interest expense	US$ in thousands	7,769	1,180	1,180	79,018	79,018
Interest coverage		57.26	188.74	204.27	2.43	3.13

January 31, 2025 calculation

Interest coverage = EBIT ÷ Interest expense
= $444,864K ÷ $7,769K
= 57.26

American Eagle Outfitters Inc's interest coverage ratio has demonstrated variability over the past few years. In January 2023, the interest coverage ratio was 3.13, indicating the company's ability to cover its interest expenses 3.13 times with its operating income. However, by January 2024, the interest coverage ratio increased significantly to 204.27, suggesting a substantial improvement in the company's ability to meet its interest obligations. This trend continued into February 2024, with an interest coverage ratio of 188.74.

Despite the high ratios in 2024, there was a decline in the interest coverage ratio by January 2025 to 57.26. This suggests that American Eagle Outfitters Inc's ability to cover its interest expenses decreased compared to the previous year, although it remained at a relatively healthy level.

Overall, the company has shown fluctuations in its interest coverage ratio over the years, with significant improvements followed by a slight decline. It is essential for investors and stakeholders to continue monitoring this ratio to assess the company's financial health and debt repayment capacity.