Best Buy Co. Inc (BBY)
Interest coverage
| Feb 1, 2025 | Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 1,350,000 | 1,674,000 | 1,824,000 | 3,053,000 | 2,429,000 |
| Interest expense | US$ in thousands | 51,000 | 52,000 | 35,000 | 25,000 | 52,000 |
| Interest coverage | 26.47 | 32.19 | 52.11 | 122.12 | 46.71 |
February 1, 2025 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,350,000K ÷ $51,000K
= 26.47
Based on the provided data for Best Buy Co. Inc's interest coverage ratio over the past five years, we can observe the following trends:
1. January 30, 2021: The interest coverage ratio was 46.71, indicating that Best Buy had a comfortable cushion to meet its interest obligations.
2. January 29, 2022: The interest coverage ratio increased significantly to 122.12, reflecting a substantial improvement in Best Buy's ability to cover its interest expenses.
3. January 28, 2023: The interest coverage ratio decreased to 52.11 compared to the previous year, but it still indicates a strong ability to pay interest obligations.
4. February 3, 2024: The interest coverage ratio dropped further to 32.19, suggesting a slight weakening in Best Buy's capacity to cover interest costs.
5. February 1, 2025: The interest coverage ratio declined again to 26.47, signaling a continued reduction in the company's ability to cover interest payments efficiently.
Overall, Best Buy experienced fluctuations in its interest coverage ratio over the five-year period, with initial strong performance followed by some declines in later years. It is essential for the company to monitor its interest coverage ratio closely to ensure it maintains a healthy financial position and can comfortably meet its interest obligations in the future.