CarMax Inc (KMX)
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 | 922,037 | 677,884 | 663,541 | 702,315 | 716,732 | 744,738 | 753,778 | 844,062 | 960,795 | 1,141,422 | 1,341,583 | 1,536,388 | 1,581,828 | 1,561,336 | 1,574,024 | 1,002,860 | 1,029,361 | 943,115 | 860,738 | 1,238,662 |
| Interest expense (ttm) | US$ in thousands | 877,635 | 860,482 | 804,046 | 763,450 | 697,044 | 633,229 | 544,889 | 449,398 | 386,118 | 326,371 | 314,136 | 257,095 | 201,736 | 220,395 | 241,154 | 244,578 | 246,596 | 262,277 | 270,181 | 264,007 |
| Interest coverage | 1.05 | 0.79 | 0.83 | 0.92 | 1.03 | 1.18 | 1.38 | 1.88 | 2.49 | 3.50 | 4.27 | 5.98 | 7.84 | 7.08 | 6.53 | 4.10 | 4.17 | 3.60 | 3.19 | 4.69 |
November 30, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $922,037K ÷ $877,635K
= 1.05
CarMax Inc's interest coverage ratio has fluctuated over the years based on the provided data. The interest coverage ratio measures the company's ability to meet its interest obligations on outstanding debt. A higher interest coverage ratio indicates a stronger ability to cover interest expenses.
From February 29, 2020, to May 31, 2021, the interest coverage ratio showed a generally improving trend, reaching its peak at 7.84 on November 30, 2021. This improvement suggests that CarMax Inc was generating sufficient earnings to comfortably cover its interest payments during this period.
However, from February 28, 2022, onwards, the interest coverage ratio started to decline gradually, indicating a potential deterioration in the company's ability to cover its interest expenses. The ratio dropped to 0.79 on August 31, 2024, which could raise concerns about the company's financial health and debt servicing capacity.
The declining trend in CarMax Inc's interest coverage ratio from 2022 to 2024 may warrant further investigation into the company's financial management, profitability, and debt levels to assess the sustainability of its interest payments and overall financial stability.
Peer comparison
Nov 30, 2024