Home Depot Inc (HD)
Interest coverage
| Jan 28, 2024 | Jan 29, 2023 | Jan 30, 2022 | Jan 31, 2021 | Feb 2, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 21,867,000 | 24,094,000 | 23,084,000 | 18,325,000 | 15,916,000 |
| Interest expense | US$ in thousands | 1,943,000 | 1,617,000 | 1,347,000 | 1,347,000 | 1,201,000 |
| Interest coverage | 11.25 | 14.90 | 17.14 | 13.60 | 13.25 |
January 28, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $21,867,000K ÷ $1,943,000K
= 11.25
The interest coverage ratio for Home Depot Inc has shown fluctuations over the past five years. In January 2024, the interest coverage ratio was 11.25, indicating that the company generated operating income 11.25 times greater than its interest expenses for that period. This represents a decline compared to the previous year, when the ratio was 14.90 in January 2023, and even more so compared to January 2022 when it was 17.14. In January 2021 and February 2020, the interest coverage ratios were 13.60 and 13.25, respectively.
The trend of decreasing interest coverage ratios from 17.14 in January 2022 to 11.25 in January 2024 suggests that Home Depot Inc may be facing challenges in generating sufficient operating income to cover its interest expenses. Investors and creditors may view this trend as a potential concern regarding the company's ability to meet its debt obligations.
It is advisable for stakeholders to closely monitor Home Depot Inc's financial performance and assess its strategies to improve operating income in relation to its interest expenses to ensure long-term financial stability.
Peer comparison
Jan 28, 2024