Helen of Troy Ltd (HELE)
Interest coverage
| Feb 29, 2024 | Feb 28, 2023 | Feb 28, 2022 | Feb 28, 2021 | Feb 29, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 262,107 | 212,040 | 272,810 | 282,047 | 178,645 |
| Interest expense | US$ in thousands | 53,065 | 40,751 | 12,844 | 12,617 | 12,705 |
| Interest coverage | 4.94 | 5.20 | 21.24 | 22.35 | 14.06 |
February 29, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $262,107K ÷ $53,065K
= 4.94
Helen of Troy Ltd's interest coverage ratio has exhibited a downward trend over the past five years. The ratio stood at 14.06 in 2020 and gradually decreased to 4.94 in 2024. This indicates the company's ability to cover its interest expenses with its earnings has weakened over the years. In 2022, there was a significant spike in the interest coverage ratio to 21.24, suggesting a strong ability to meet interest obligations from operating income. However, this strong performance was not sustained, as the ratio declined in subsequent years. It is important for stakeholders to closely monitor this trend, as a declining interest coverage ratio could signal increased financial risk for the company.