DocuSign Inc (DOCU)

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 199,928 100,523 -83,492 -60,471 -198,693
Interest expense US$ in thousands 1,550 6,844 6,389 6,443 30,799
Interest coverage 128.99 14.69 -13.07 -9.39 -6.45

January 31, 2025 calculation

Interest coverage = EBIT ÷ Interest expense
= $199,928K ÷ $1,550K
= 128.99

Based on the provided data for DocuSign Inc's interest coverage ratio from January 31, 2021, to January 31, 2025, the trend shows significant fluctuations.

- As of January 31, 2021, the interest coverage ratio was -6.45, indicating that the company was not generating sufficient earnings to cover its interest expenses. This could raise concerns about the company's ability to meet its debt obligations.

- The interest coverage ratio further declined to -9.39 by January 31, 2022, worsening the situation and signaling continued weakness in the company's ability to service its debt.

- By January 31, 2023, the interest coverage ratio deteriorated even further to -13.07, reflecting a continued struggle to generate enough income to cover interest payments. This raised further red flags regarding the company's financial health and ability to manage debt.

- There was a significant positive turnaround by January 31, 2024, with an interest coverage ratio of 14.69, indicating a substantial improvement in the company's ability to cover its interest expenses from its earnings. This improvement suggests better financial performance and reduced financial risk.

- The most recent data point, January 31, 2025, shows a significant boost in the interest coverage ratio to 128.99, demonstrating a robust ability to cover interest expenses multiple times over with earnings. This indicates a strong financial position and improved profitability for DocuSign Inc.

Overall, the analysis of DocuSign Inc's interest coverage ratio shows a volatile trend, with initial concerns about debt serviceability transforming into a strong financial position with significantly improved interest coverage in the later years. It suggests that the company has made significant strides in managing its debt and generating sufficient earnings to cover interest expenses effectively.