CAVA Group, Inc. (CAVA)

Interest coverage

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	43,436	31,422	-58,847	-32,464	72,400
Interest expense	US$ in thousands	16,474	—	47	4,810	—
Interest coverage		2.64	—	-1,252.06	-6.75	—

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $43,436K ÷ $16,474K
= 2.64

The interest coverage ratios for CAVA Group, Inc. over the specified periods exhibit significant fluctuations, highlighting periods of financial stress and subsequent improvement. As of December 31, 2020, the interest coverage ratio data is unavailable or not applicable, suggesting either the absence of debt or an inability to calculate the ratio at that time.

In 2021, the company experienced a detrimental decline in its interest coverage ratio, recording a figure of -6.75. This negative value indicates that interest expenses exceeded operating earnings (possibly EBIT or EBITDA), reflecting substantial difficulties in generating sufficient earnings to cover interest obligations. The situation appears to have worsened notably by December 31, 2022, with the interest coverage ratio plummeting to -1,252.06. Such an extremely negative ratio implies a severe mismatch between earnings and interest obligations, likely due to considerable operational losses or extraordinary expenses that undermined the company's capacity to meet its interest payments.

By December 31, 2023, CAVA’s interest coverage data once again remains unavailable or not applicable, which may suggest a period of financial restructuring, the absence of interest expenses, or a reporting anomaly. However, significant positive change is observed in 2024, with the ratio improving to 2.64. This indicates that, by the end of 2024, the company's earnings have increased sufficiently to cover its interest expenses approximately 2.6 times over, signaling a meaningful recovery from prior periods of distress.

Overall, the historical trend reflects a trajectory from critical financial strain towards stabilization and potential improvement. The negative ratios in the prior years point to periods of significant earnings shortfalls relative to interest obligations, while the positive ratio in 2024 suggests a reassessment of the company's financial health, with better earnings capacity and a more sustainable interest coverage situation.