KB Home (KBH)

Interest coverage

Nov 30, 2024 Aug 31, 2024 May 31, 2024 Feb 29, 2024 Nov 30, 2023 Aug 31, 2023 May 31, 2023 Feb 28, 2023 Nov 30, 2022 Aug 31, 2022 May 31, 2022 Feb 28, 2022 Nov 30, 2021 Aug 31, 2021 May 31, 2021 Feb 28, 2021 Nov 30, 2020 Aug 31, 2020 May 31, 2020 Feb 29, 2020
Earnings before interest and tax (EBIT) (ttm) US$ in thousands 6,727,250 6,408,230 6,242,630 6,298,140 6,215,930 6,445,010 6,697,700 6,652,440 6,669,090 6,467,000 6,081,800 5,802,630 5,539,470 4,257,394 3,788,907 3,248,587 3,179,307 3,244,517 3,409,694 3,524,124
Interest expense (ttm) US$ in thousands 53,082 79,559 218,289 204,552 186,759 160,719 22,181 9,380 704 5,044 9,631 16,750 23,641 26,028 30,812 37,047 36,182 36,622 30,592 19,769
Interest coverage 126.73 80.55 28.60 30.79 33.28 40.10 301.96 709.22 9,473.14 1,282.12 631.48 346.43 234.32 163.57 122.97 87.69 87.87 88.59 111.46 178.27

November 30, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $6,727,250K ÷ $53,082K
= 126.73

The interest coverage ratio indicates the company's ability to cover its interest expenses with its operating income. A higher interest coverage ratio is generally favorable as it suggests that the company is generating enough operating income to comfortably meet its interest obligations.

Looking at the data provided for KB Home's interest coverage ratio over the period from February 29, 2020, to November 30, 2024, we observe fluctuations in the ratio. The interest coverage ratio started at 178.27 in February 2020, indicating a strong ability to cover interest expenses. The ratio then decreased to 28.60 in May 2024 before increasing to 126.73 in November 2024.

The significant drop in the interest coverage ratio from the peak of 9,473.14 in November 2022 to 30.79 in February 2024 may raise concerns about the company's ability to cover its interest expenses during that period. However, the ratio improves in the following quarters but remains lower than the peak level.

Overall, KB Home's interest coverage ratio has shown varying levels over the period, indicating fluctuations in the company's ability to cover its interest expenses with its operating income. It would be important to monitor the trend of this ratio over time to assess the company's financial health and ability to meet its debt obligations.