CarMax Inc (KMX)
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 | 766,345 | 757,202 | 1,586,440 | 1,051,440 | 1,243,990 |
| Interest expense | US$ in thousands | 124,750 | 120,398 | 94,095 | 86,178 | 83,007 |
| Interest coverage | 6.14 | 6.29 | 16.86 | 12.20 | 14.99 |
February 29, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $766,345K ÷ $124,750K
= 6.14
CarMax Inc's interest coverage ratio has exhibited some fluctuation over the past five years. In fiscal year 2024, the interest coverage ratio was 6.14, slightly lower than the previous year's ratio of 6.29. This indicates that the company generated 6.14 times the amount of operating income to cover its interest expenses in the most recent fiscal year.
Comparing the current ratio to earlier years, we observe a significant decrease from the exceptionally high ratio of 16.86 in fiscal year 2022. This may suggest increased interest expenses in relation to operating income in fiscal year 2024 compared to the relatively low interest burden in fiscal year 2022.
Despite the slight decline in the interest coverage ratio in the most recent year, CarMax Inc maintained a relatively strong position with a ratio above 1, indicating that the company's operating income is sufficient to cover its interest payments. However, it would be prudent to continue monitoring this ratio in future periods to ensure that the company's financial health remains stable in terms of its ability to meet interest obligations.
Peer comparison
Feb 29, 2024