Salesforce.com Inc (CRM)

Interest coverage

		Jan 31, 2025	Jan 31, 2024	Jan 31, 2023	Jan 31, 2022	Jan 31, 2021
Earnings before interest and tax (EBIT)	US$ in thousands	7,205,000	5,011,000	1,030,000	548,000	455,000
Interest expense	US$ in thousands	272,000	29,000	297,000	221,000	125,000
Interest coverage		26.49	172.79	3.47	2.48	3.64

January 31, 2025 calculation

Interest coverage = EBIT ÷ Interest expense
= $7,205,000K ÷ $272,000K
= 26.49

Interest coverage ratio measures a company's ability to cover its interest expenses with its earnings before interest and taxes (EBIT). Looking at the data provided for Salesforce.com Inc, we observe fluctuations in the interest coverage ratio over the years:

1. January 31, 2021: The interest coverage ratio was 3.64, indicating that the company's EBIT was sufficient to cover its interest payments by approximately 3.64 times.

2. January 31, 2022: The interest coverage ratio decreased to 2.48, suggesting that the company's EBIT decreased relative to its interest expenses, potentially indicating increased financial risk.

3. January 31, 2023: The ratio improved to 3.47, showing a slight recovery in the company's ability to cover its interest obligations.

4. January 31, 2024: A significant improvement is seen with an interest coverage ratio of 172.79, indicating a substantial increase in earnings relative to interest expenses, reflecting a strong financial position.

5. January 31, 2025: The ratio decreased to 26.49, still indicating a healthy interest coverage, although lower than the previous year.

Overall, the trend in Salesforce.com Inc's interest coverage ratio shows fluctuations but suggests the company has generally been able to cover its interest payments. The significant variations in the ratio over the years may indicate changes in the company's financial performance and leverage, warranting further analysis to understand the underlying reasons for these fluctuations.