Box Inc (BOX)

Interest coverage

		Jan 31, 2025	Oct 31, 2024	Jul 31, 2024	Apr 30, 2024	Jan 31, 2024	Oct 31, 2023	Jul 31, 2023	Apr 30, 2023	Jan 31, 2023	Oct 31, 2022	Jul 31, 2022	Apr 30, 2022	Jan 31, 2022	Oct 31, 2021	Jul 31, 2021	Apr 30, 2021	Jan 31, 2021	Oct 31, 2020	Jul 31, 2020	Apr 30, 2020
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	79,858	82,862	70,830	60,425	50,753	49,299	51,286	44,551	36,840	16,964	-7,489	-16,739	-37,963	-40,279	-31,806	-33,206	-36,846	-63,233	-100,505	-128,579
Interest expense (ttm)	US$ in thousands	12,194	10,540	6,222	9,515	11,833	11,214	10,840	8,198	10,037	7,798	8,707	9,996	9,838	10,420	9,817	9,642	7,010	6,062	5,067	3,637
Interest coverage		6.55	7.86	11.38	6.35	4.29	4.40	4.73	5.43	3.67	2.18	-0.86	-1.67	-3.86	-3.87	-3.24	-3.44	-5.26	-10.43	-19.84	-35.35

January 31, 2025 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $79,858K ÷ $12,194K
= 6.55

Box Inc's interest coverage ratio has shown a fluctuating trend over the past few years. The interest coverage ratio measures the company's ability to cover its interest expenses with its operating income. A higher interest coverage ratio indicates that the company is more capable of meeting its interest obligations.

In April 2020, the interest coverage ratio was -35.35, indicating that Box Inc was unable to cover its interest expenses with its operating income, which may raise concerns about the company's financial health and ability to service its debt. The ratio continued to improve slightly over the next few quarters, but remained negative, reflecting ongoing challenges in meeting interest obligations.

By October 2022, the interest coverage ratio increased to 2.18, entering positive territory for the first time in the dataset. This improvement suggests that Box Inc's operating income was becoming more sufficient to cover its interest expenses. The trend continued to improve, with the ratio reaching 11.38 by July 2024, indicating a significant improvement in the company's ability to meet its interest payments.

Overall, the analysis of Box Inc's interest coverage ratio shows a transition from severe financial strain to a more stable financial position, as reflected in the increasing trend of the ratio over the period under consideration. However, it is essential for Box Inc to sustain this positive trend to ensure continued financial stability and debt servicing capability.