Guidewire Software Inc (GWRE)
Interest coverage
| Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | Jul 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | -52,573 | -149,490 | -199,447 | -105,584 | -23,886 |
| Interest expense | US$ in thousands | 6,738 | 6,716 | 19,446 | 18,711 | 17,945 |
| Interest coverage | -7.80 | -22.26 | -10.26 | -5.64 | -1.33 |
July 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $-52,573K ÷ $6,738K
= -7.80
The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. A higher ratio indicates a greater ability to cover interest expenses. Looking at Guidewire Software Inc's interest coverage ratio over the years, we observe a negative trend. In July 2020, the ratio was -1.33, indicating that the company's earnings before interest and taxes (EBIT) were insufficient to cover its interest expenses. This trend continued, with the ratio deteriorating further to -5.64 in July 2021, -10.26 in July 2022, and hitting a low of -22.26 in July 2023. Although there was a slight improvement in July 2024 with a ratio of -7.80, the overall trend suggests that Guidewire Software Inc has been struggling to generate enough earnings to cover its interest obligations. This persistent negative trend in the interest coverage ratio raises concerns about the company's financial stability and its ability to service its debt in the long run.
Peer comparison
Jul 31, 2024