HealthEquity Inc (HQY)

Interest coverage

		Jan 31, 2024	Oct 31, 2023	Jul 31, 2023	Apr 30, 2023	Jan 31, 2023	Oct 31, 2022	Jul 31, 2022	Apr 30, 2022	Jan 31, 2022	Oct 31, 2021	Jul 31, 2021	Apr 30, 2021	Jan 31, 2021	Oct 31, 2020	Jul 31, 2020	Apr 30, 2020	Jan 31, 2020	Oct 31, 2019	Jul 31, 2019	Apr 30, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	130,495	101,450	72,803	42,927	10,328	-37,002	-40,231	-38,382	-30,169	8,277	16,602	25,337	39,021	47,402	15,294	30,893	67,927	70,543	109,069	106,829
Interest expense (ttm)	US$ in thousands	55,455	56,119	54,739	52,960	48,424	44,867	44,583	40,344	36,572	32,595	27,666	29,307	34,881	42,527	45,800	36,972	24,772	10,421	264	266
Interest coverage		2.35	1.81	1.33	0.81	0.21	-0.82	-0.90	-0.95	-0.82	0.25	0.60	0.86	1.12	1.11	0.33	0.84	2.74	6.77	413.14	401.61

January 31, 2024 calculation

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

The interest coverage ratio of HealthEquity Inc has shown significant fluctuations over the past few quarters. A ratio above 1 indicates that the company is generating enough earnings to cover its interest expenses.

From Jan 31, 2024, to Jan 31, 2023, the interest coverage ratio has improved steadily from 2.35 to 0.21, indicating a decline in the company's ability to cover its interest expenses with operating income. However, the ratio significantly improved to 413.14 by Jul 31, 2019, before declining to 401.61 by Apr 30, 2019.

The negative ratios recorded in some quarters imply that the company did not generate sufficient operating income to cover its interest expenses, raising concerns about its financial health and ability to meet debt obligations. It is essential for the company to closely monitor and manage its interest coverage ratio to ensure long-term financial stability.