G-III Apparel Group Ltd (GIII)

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	288,701	280,194	-81,568	274,797	29,347
Interest expense	US$ in thousands	18,842	39,595	56,602	49,666	50,354
Interest coverage		15.32	7.08	-1.44	5.53	0.58

January 31, 2025 calculation

Interest coverage = EBIT ÷ Interest expense
= $288,701K ÷ $18,842K
= 15.32

The interest coverage ratio measures a company's ability to meet its interest expenses using its operating income. Looking at the historical trend for G-III Apparel Group Ltd, we observe the following:

1. January 31, 2021: The interest coverage ratio was 0.58, indicating that the company's operating income was only able to cover 58% of its interest expenses. This suggests a relatively weak ability to meet interest obligations from operating earnings.

2. January 31, 2022: The interest coverage ratio improved significantly to 5.53, signaling a stronger ability to cover interest expenses compared to the previous year. This indicates higher operating income relative to interest payments, which is a positive trend.

3. January 31, 2023: The interest coverage ratio turned negative at -1.44, implying that the company's operating income was insufficient to cover its interest expenses. A negative interest coverage ratio is a warning sign, suggesting financial distress and potential difficulties in meeting debt obligations.

4. January 31, 2024: The interest coverage ratio rebounded to 7.08, demonstrating a substantial improvement in the company's ability to cover interest expenses with operating income. This indicates a healthier financial position compared to the previous year.

5. January 31, 2025: The interest coverage ratio further strengthened to 15.32, showing a robust ability to cover interest expenses with operating earnings. A high interest coverage ratio usually indicates a lower risk of default and a healthier financial position.

In summary, G-III Apparel Group Ltd experienced fluctuating interest coverage ratios over the years, with periods of improvement and challenges. It is important for investors and stakeholders to monitor the company's interest coverage ratio closely to assess its ability to service debt and manage financial risks effectively.