GameStop Corp (GME)
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 | -34,500 | -43,500 | -125,100 | -216,300 | -311,600 | -524,800 | -531,400 | -481,500 | -368,600 | -184,200 | -144,000 | -171,600 | -238,500 | -194,500 | -175,600 | -535,900 | -406,100 | -615,200 | -1,069,900 | -607,200 |
| Interest expense (ttm) | US$ in thousands | 21,300 | 27,500 | 31,200 | 19,900 | 10,900 | 5,400 | 2,500 | 2,800 | 26,800 | 32,700 | 41,900 | 49,200 | 32,100 | 22,100 | 20,100 | 21,800 | 27,200 | 44,700 | 50,800 | 55,600 |
| Interest coverage | -1.62 | -1.58 | -4.01 | -10.87 | -28.59 | -97.19 | -212.56 | -171.96 | -13.75 | -5.63 | -3.44 | -3.49 | -7.43 | -8.80 | -8.74 | -24.58 | -14.93 | -13.76 | -21.06 | -10.92 |
February 3, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-34,500K ÷ $21,300K
= -1.62
The interest coverage ratio for GameStop Corp has fluctuated significantly over the past few years, indicating potential financial challenges. The ratio has been consistently below 1, with negative values recorded in most periods, which implies that the company's operating income was insufficient to cover its interest expenses. This signifies a high risk for creditors and investors, as GameStop may struggle to meet its debt obligations in the future. The downward trend in the interest coverage ratio suggests a worsening financial position and heightened financial distress. Management should focus on improving profitability and cash flow generation to enhance the company's ability to service its debt in the long term.