Movado Group Inc (MOV)
Interest coverage
| Jan 31, 2024 | Jan 31, 2023 | Jan 31, 2022 | Jan 31, 2021 | Jan 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 59,869 | 119,928 | 117,061 | -140,747 | 58,753 |
| Interest expense | US$ in thousands | 497 | 518 | 688 | 1,959 | 930 |
| Interest coverage | 120.46 | 231.52 | 170.15 | -71.85 | 63.18 |
January 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $59,869K ÷ $497K
= 120.46
Movado Group Inc's interest coverage ratio has fluctuated over the past five years. The ratio stood at a high of 231.52 in January 2023, indicating that the company generated significantly more earnings before interest and taxes (EBIT) relative to its interest expenses. This high ratio suggests that Movado had a strong ability to meet its interest obligations comfortably.
In contrast, in January 2021, the interest coverage ratio dropped to a negative figure of -71.85, indicating that Movado's EBIT was insufficient to cover its interest expenses during that period. This could be a red flag for creditors and investors as it suggests a potential risk of default on debt payments.
However, the company managed to improve its interest coverage ratio in the subsequent years, reaching 120.46 in January 2024. While Movado's interest coverage has displayed volatility, the recent improvement indicates that the company's earnings relative to its interest expenses have strengthened.
Overall, Movado Group Inc's interest coverage ratio has shown variability, with both highs and lows in recent years. Investors and creditors should closely monitor this ratio to assess the company's ability to service its debt obligations effectively.