Five Below Inc (FIVE)

Interest coverage

		Feb 3, 2024	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	385,571	345,043	379,880	154,803	217,284
Interest expense	US$ in thousands	—	2,491	13,177	1,736	4,285
Interest coverage		—	138.52	28.83	89.17	50.71

February 3, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $385,571K ÷ $—K
= —

The interest coverage ratio for Five Below Inc has shown fluctuating trends over the past five years. In 2023, the ratio was notably high at 138.52, indicating the company's ability to cover its interest expenses nearly 139 times over with its earnings. This high ratio suggests a strong financial position and a low risk of default on debt obligations.

In contrast, the interest coverage ratio in 2022 was 28.83, significantly lower than the previous year. Although the company's earnings still covered its interest expenses almost 29 times over, this decline may raise concerns about the firm's ability to service its debt obligations comfortably.

The following years, 2021 and 2020, exhibited ratios of 89.17 and 50.71, respectively. These ratios indicate that the company's earnings were sufficient to cover its interest expenses around 89 and 51 times, respectively. While still robust, these ratios are lower compared to 2023 but suggest a relatively healthy financial position.

Overall, fluctuations in Five Below Inc's interest coverage ratio over the years may reflect changes in the company's earnings and/or interest expenses. Monitoring this ratio is crucial for assessing the company's ability to meet its interest obligations and manage its debt effectively.