Dollar Tree Inc (DLTR)

Interest coverage

		Feb 3, 2024	Oct 28, 2023	Jul 29, 2023	Apr 29, 2023	Jan 28, 2023	Oct 29, 2022	Jul 30, 2022	Apr 30, 2022	Jan 29, 2022	Oct 30, 2021	Jul 31, 2021	May 1, 2021	Jan 30, 2021	Oct 31, 2020	Aug 1, 2020	May 2, 2020	Feb 1, 2020	Nov 2, 2019	Aug 3, 2019	May 4, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	-881,800	1,627,300	1,706,900	1,924,500	2,236,300	2,197,000	2,126,200	2,023,000	1,811,400	1,914,200	2,069,200	2,041,900	1,887,900	1,455,700	1,348,600	1,242,600	1,262,200	-1,134,600	-1,105,200	-991,600
Interest expense (ttm)	US$ in thousands	106,800	108,500	110,800	117,200	125,300	176,800	177,500	179,900	178,900	133,600	138,300	140,100	147,300	152,300	155,600	160,900	162,100	169,200	175,400	181,400
Interest coverage		-8.26	15.00	15.41	16.42	17.85	12.43	11.98	11.25	10.13	14.33	14.96	14.57	12.82	9.56	8.67	7.72	7.79	-6.71	-6.30	-5.47

February 3, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-881,800K ÷ $106,800K
= -8.26

The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. A higher interest coverage ratio indicates a company is more capable of meeting interest obligations.

Looking at the interest coverage ratio of Dollar Tree Inc over time, it is evident that there have been fluctuations. The company had a negative interest coverage in several periods, indicating that its operating income was insufficient to cover its interest expenses. The negative ratios are a cause for concern as it signifies potential financial distress.

However, there are periods where Dollar Tree Inc's interest coverage ratio improved significantly, surpassing 10x in some quarters. This indicates a healthier financial position and a stronger ability to meet interest payments from operating income.

It's important for investors and creditors to monitor these fluctuations in the interest coverage ratio as it can provide insights into the company's financial health and ability to manage its debt obligations effectively.