Lowe's Companies Inc (LOW)

Interest coverage

		Jan 31, 2025	Feb 2, 2024	Jan 31, 2024	Feb 3, 2023	Jan 31, 2023
Earnings before interest and tax (EBIT)	US$ in thousands	10,625,000	11,557,000	11,648,000	10,159,000	10,174,000
Interest expense	US$ in thousands	1,472,000	1,482,000	1,483,000	1,157,000	1,160,000
Interest coverage		7.22	7.80	7.85	8.78	8.77

January 31, 2025 calculation

Interest coverage = EBIT ÷ Interest expense
= $10,625,000K ÷ $1,472,000K
= 7.22

Interest coverage is a financial ratio that indicates a company's ability to pay its interest expenses on outstanding debt. Lowe's Companies Inc has shown consistent interest coverage ratios over the years. The interest coverage ratio for the fiscal year ending January 31, 2023, was 8.77, indicating that Lowe's generated 8.77 times the earnings to cover its interest expenses. The ratio remained relatively stable in the following year, with a ratio of 8.78 as of February 3, 2023.

However, there was a slight decrease in the interest coverage ratio for the fiscal year ending January 31, 2024, to 7.85, and a further decline to 7.80 as of February 2, 2024. This decline suggests that Lowe's might be facing challenges in generating sufficient earnings to cover its interest payments.

By January 31, 2025, the interest coverage ratio dropped further to 7.22, indicating a continued decrease in the company's ability to cover its interest expenses. It is essential for Lowe's to closely monitor its earnings and interest expenses to ensure it maintains a healthy interest coverage ratio and meets its debt obligations without strain.