American Eagle Outfitters Inc (AEO)

Interest coverage

		Feb 3, 2024	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	222,717	247,047	591,065	-271,345	233,345
Interest expense	US$ in thousands	1,180	79,018	34,632	24,610	149,055
Interest coverage		188.74	3.13	17.07	-11.03	1.57

February 3, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $222,717K ÷ $1,180K
= 188.74

The interest coverage ratio for American Eagle Outfitters Inc has shown significant fluctuations over the past five fiscal years. In February 2024, the interest coverage ratio improved significantly to 188.74, indicating that the company generated ample operating income to cover its interest expenses. This is a positive sign of the company's financial health and ability to meet its debt obligations.

In contrast, in January 2023, the interest coverage ratio dropped to 3.13, reflecting a lower ability to cover interest expenses with operating income. However, the ratio improved in January 2022 to 17.07, suggesting a better capacity to meet interest obligations compared to the previous year.

The interest coverage ratio was negative in January 2021 at -11.03, indicating that the company's operating income was insufficient to cover its interest expenses during that period. The ratio improved slightly in February 2020 to 1.57 but still indicated a relatively low ability to cover interest payments.

Overall, the trend in American Eagle Outfitters Inc's interest coverage ratio has been volatile. Investors and creditors need to carefully monitor these fluctuations to assess the company's ability to service its debt and manage its financial obligations effectively.