GameStop Corp (GME)
Interest coverage
| Jan 31, 2025 | Oct 31, 2024 | Jul 31, 2024 | Apr 30, 2024 | Feb 3, 2024 | Jan 31, 2024 | Oct 31, 2023 | Oct 28, 2023 | Jul 31, 2023 | Jul 29, 2023 | Apr 30, 2023 | Apr 29, 2023 | Jan 31, 2023 | Jan 28, 2023 | Oct 31, 2022 | Oct 29, 2022 | Jul 31, 2022 | Jul 30, 2022 | Apr 30, 2022 | Jan 31, 2022 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | -16,500 | -42,200 | 53,600 | 60,900 | 96,800 | 25,000 | -62,600 | -106,300 | -150,000 | -87,000 | -24,200 | -58,400 | -96,300 | -248,000 | -402,000 | -463,100 | -533,600 | -595,300 | -590,400 | -539,600 |
| Interest expense (ttm) | US$ in thousands | 0 | 0 | 0 | 0 | 0 | 11,600 | 23,200 | 32,900 | 42,600 | 37,200 | 31,800 | 25,800 | 19,800 | 13,900 | 8,000 | 5,000 | 2,000 | 2,400 | 2,900 | 3,000 |
| Interest coverage | — | — | — | — | — | 2.16 | -2.70 | -3.23 | -3.52 | -2.34 | -0.76 | -2.26 | -4.86 | -17.84 | -50.25 | -92.62 | -266.80 | -248.04 | -203.59 | -179.87 |
January 31, 2025 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-16,500K ÷ $0K
= —
The interest coverage ratio is a key financial metric that indicates a company's ability to meet its interest obligations on its outstanding debt. A higher interest coverage ratio typically signifies a stronger ability to cover interest payments.
Analyzing GameStop Corp's interest coverage from the provided data, it is evident that the company has been experiencing consistently negative interest coverage ratios from January 31, 2022, to October 31, 2023. This indicates that GameStop was not generating enough operating income to cover its interest expenses during this period. The declining trend in the interest coverage ratio suggests potential financial distress or liquidity issues within the company.
However, starting from January 31, 2024, the interest coverage ratio turned positive with a value of 2.16. This indicates that GameStop's operating income was finally sufficient to cover its interest expenses at this point in time. Unfortunately, the subsequent data points are not available for analysis beyond that date.
It is crucial for investors and stakeholders to monitor the interest coverage ratio closely, as a consistently low or negative ratio may indicate a higher risk of default on debt obligations and financial instability within the company. Continued improvement in the interest coverage ratio over time would be a positive sign of the company's financial health and ability to manage its debt effectively.