HealthEquity Inc (HQY)

Interest coverage

		Jan 31, 2024	Jan 31, 2023	Jan 31, 2022	Jan 31, 2021	Jan 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	130,495	10,328	-30,169	39,021	67,927
Interest expense	US$ in thousands	55,455	48,424	36,572	34,881	24,772
Interest coverage		2.35	0.21	-0.82	1.12	2.74

January 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $130,495K ÷ $55,455K
= 2.35

HealthEquity Inc's interest coverage ratio has fluctuated significantly over the past five years. The ratio has shown a positive trend, starting at 2.74 in Jan 31, 2020 and reaching its lowest point at -0.82 in Jan 31, 2022. This negative value indicates that the company's operating income was insufficient to cover its interest expenses in that particular fiscal year.

However, HealthEquity's interest coverage improved significantly in the following years, reaching 2.35 in Jan 31, 2024. This suggests that the company's ability to meet its interest obligations has strengthened over time, indicating a positive trend in its financial health.

It is important for investors and creditors to consider this improving trend in interest coverage, as it signifies the company's capacity to manage its debt obligations and the sustainability of its operations.