Copart Inc (CPRT)

The interest coverage ratios of Copart Inc. over the specified periods indicate notable fluctuations, reflecting changing capacity to meet interest obligations from operating earnings. As of July 31, 2021, the ratio stood at 56.18, signifying a robust ability to cover interest expenses—indicative of strong operating profitability relative to interest obligations. This high level of interest coverage persisted into July 31, 2022, with an even higher ratio of 82.43, suggesting an improved buffer between operating earnings and interest expenses.

However, a marked decline is observed in the fiscal year ending July 31, 2023, where the ratio decreased to 22.55. Although still above the commonly regarded safe threshold (typically 3x), this significant reduction highlights a weakening in Copart’s capacity to cover interest costs solely through operating earnings. The downward trend continues into subsequent years, with ratios of 10.79 recorded as of July 31, 2024, and further slight decline to 10.60 as of July 31, 2025.

These figures suggest that while Copart has historically maintained a strong ability to meet interest obligations, recent years have seen a contraction in this capacity. The decreasing trend raises potential concerns regarding increased financial risk, especially if operating earnings face downward pressures or interest expenses rise further. Nonetheless, the ratios remain above typical distress thresholds, indicating a still manageable level of interest coverage, albeit with less cushion than in previous years.