Box Inc (BOX)

Interest coverage

		Jan 31, 2025	Jan 31, 2024	Jan 31, 2023	Jan 31, 2022	Jan 31, 2021
Earnings before interest and tax (EBIT)	US$ in thousands	79,085	50,753	36,840	-30,640	-39,764
Interest expense	US$ in thousands	6,075	11,833	2,433	9,838	7,010
Interest coverage		13.02	4.29	15.14	-3.11	-5.67

January 31, 2025 calculation

Interest coverage = EBIT ÷ Interest expense
= $79,085K ÷ $6,075K
= 13.02

The interest coverage ratio measures a company's ability to pay interest on its outstanding debt with its operating income. Box Inc's interest coverage has fluctuated over the years. As of January 31, 2021, the company had an interest coverage of -5.67, indicating that its operating income was insufficient to cover its interest expenses. This raised concerns about the company's financial health and ability to meet its debt obligations.

By January 31, 2022, the interest coverage improved to -3.11, though it still remained negative. The negative values suggest that Box Inc was operating at a loss, making it difficult for the company to cover its interest payments comfortably.

However, starting from January 31, 2023, the interest coverage ratio saw a significant improvement to 15.14, signaling that Box Inc's operating income was more than sufficient to cover its interest expenses. This positive trend continued into January 31, 2024, with an interest coverage of 4.29, although it was lower than the previous year.

By January 31, 2025, Box Inc's interest coverage ratio further improved to 13.02, demonstrating the company's strengthening financial position and its ability to comfortably meet its interest obligations. Overall, Box Inc has shown a notable turnaround in its interest coverage, moving from negative values to comfortably positive levels, reflecting a positive trajectory in managing its debt and improving profitability.