G-III Apparel Group Ltd (GIII)

Interest coverage

Jan 31, 2024 Jan 31, 2023 Jan 31, 2022 Jan 31, 2021 Jan 31, 2020
Earnings before interest and tax (EBIT) US$ in thousands 283,343 -109,462 311,093 82,842 227,654
Interest expense US$ in thousands 39,595 56,602 49,666 50,354 10,491
Interest coverage 7.16 -1.93 6.26 1.65 21.70

January 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $283,343K ÷ $39,595K
= 7.16

Interest coverage ratio indicates the company's ability to cover its interest expenses with its operating income. A higher interest coverage ratio is generally considered favorable as it suggests the company is generating sufficient operating income to meet its interest obligations.

G-III Apparel Group Ltd's interest coverage ratio has fluctuated over the past five years, ranging from a low of -1.93 in Jan 31, 2023 to a high of 21.70 in Jan 31, 2020. The negative interest coverage ratio in Jan 31, 2023 indicates that the company's operating income was insufficient to cover its interest expenses during that period, which can be a cause for concern. However, the significant improvement in the interest coverage ratio in subsequent years, reaching 7.16 in Jan 31, 2024, suggests that the company has managed to enhance its operational efficiency and profitability to better meet its interest obligations.

Overall, G-III Apparel Group Ltd's interest coverage ratio has shown volatility, but the recent improvement indicates the company's progress in managing its interest expenses more effectively. Going forward, it will be important to monitor this ratio to ensure the company can continue to generate enough operating income to cover its interest costs.