Capri Holdings Ltd (CPRI)
Interest coverage
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | -241,000 | 679,000 | 903,000 | 19,000 | -192,000 |
| Interest expense | US$ in thousands | 6,000 | 24,000 | 18,000 | 6,000 | 8,000 |
| Interest coverage | -40.17 | 28.29 | 50.17 | 3.17 | -24.00 |
March 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $-241,000K ÷ $6,000K
= -40.17
Capri Holdings Ltd's interest coverage ratio has displayed significant fluctuations over the past five years. The interest coverage ratio is a measure of a company's ability to meet its interest obligations with its earnings before interest and taxes (EBIT).
In the financial year ending March 31, 2024, Capri Holdings Ltd's interest coverage ratio was -40.17, indicating that the company's EBIT was significantly insufficient to cover its interest expenses. This negative ratio suggests financial distress and raises concerns about the company's ability to service its debt obligations.
In contrast, the interest coverage ratio for the previous years showed a much healthier picture. In March 31, 2023, the interest coverage ratio was 28.29, indicating a strong ability to cover interest expenses. This trend continued in March 31, 2022, with an even higher interest coverage ratio of 50.17, reflecting robust earnings relative to interest obligations.
However, the interest coverage ratio deteriorated in March 31, 2021, to 3.17, signaling a potential strain on the company's ability to cover its interest payments with its earnings. The downward trend continued in March 31, 2020, with an interest coverage ratio of -24.00, indicating a concerning situation where EBIT was insufficient to cover interest expenses.
Overall, Capri Holdings Ltd's interest coverage ratio has been volatile, with periods of strong coverage followed by significant declines. It is essential for investors and stakeholders to closely monitor this ratio as it can provide insights into the company's financial health and ability to manage its debt obligations effectively.
Peer comparison
Mar 31, 2024