BJs Restaurants Inc (BJRI)
Interest coverage
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 13,759 | -5,480 | -16,507 | -86,431 | 49,119 |
| Interest expense | US$ in thousands | 217 | 221 | 511 | 85 | 4,613 |
| Interest coverage | 63.41 | -24.80 | -32.30 | -1,016.84 | 10.65 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $13,759K ÷ $217K
= 63.41
The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt. A higher ratio indicates that the company is more capable of servicing its debt obligations.
In the case of BJs Restaurants Inc, the interest coverage ratio has been inconsistent over the past five years. In 2023, the interest coverage ratio improved significantly to 63.41, indicating that the company had more than enough operating income to cover its interest expenses. This is a positive sign as it suggests that the company's earnings are sufficient to meet its interest payments comfortably.
On the other hand, the negative interest coverage ratios in 2022 and 2021 (-24.80 and -32.30, respectively) indicate that the company's operating income was insufficient to cover its interest expenses during those years. This raises concerns about the company's ability to service its debt obligations and may imply financial distress.
The exceptionally low interest coverage ratio of -1,016.84 in 2020 is an anomaly and could be due to unique one-time events or accounting irregularities that distorted the ratio calculation.
Overall, while the improvement in the interest coverage ratio in 2023 is positive, it is essential for investors and stakeholders to monitor BJs Restaurants Inc's future financial performance to ensure the company can maintain a healthy level of interest coverage and manage its debt effectively.
Peer comparison
Dec 31, 2023