Carter’s Inc (CRI)

Interest coverage

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	336,215	300,373	296,956	313,356	359,517	387,694	420,646	473,419	498,584	497,139	490,232	402,516	191,046	218,397	185,369	229,362	365,569	371,505	391,625	383,062
Interest expense (ttm)	US$ in thousands	33,973	35,627	36,724	37,293	42,781	47,951	53,435	60,078	60,294	61,378	62,529	62,546	56,062	49,473	43,092	36,852	37,617	37,446	37,348	36,213
Interest coverage		9.90	8.43	8.09	8.40	8.40	8.09	7.87	7.88	8.27	8.10	7.84	6.44	3.41	4.41	4.30	6.22	9.72	9.92	10.49	10.58

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $336,215K ÷ $33,973K
= 9.90

The interest coverage ratio for Carter’s Inc has shown fluctuations over the periods under review. The ratio indicates the company's ability to meet its interest obligations from its operating income. A higher interest coverage ratio is generally preferable as it suggests that the company is generating sufficient earnings to cover its interest expenses.

From December 2019 to September 2020, the interest coverage ratio remained relatively stable, ranging between 9.72 and 9.90, indicating a strong ability to cover interest payments. However, there was a significant decline in the ratio in the following quarters, reaching a low of 3.41 in December 2020 and 4.30 in June 2020. These lower ratios may raise concerns about the company's ability to meet its interest obligations using its current earnings.

From March 2021 onwards, Carter’s Inc saw an improvement in its interest coverage ratio, reaching 8.40 in December 2023. This upward trend suggests that the company's earnings have become more sufficient to cover its interest expenses compared to the earlier decrease. Overall, the recent ratios indicate a moderately strong interest coverage position for Carter's Inc, although monitoring future performance is recommended to ensure continued financial stability.