RH (RH)
Solvency ratios
| Jan 31, 2025 | Feb 3, 2024 | Jan 31, 2024 | Jan 31, 2023 | Jan 28, 2023 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | — | — | — | 0.00 | 0.02 |
| Debt-to-equity ratio | — | — | — | 0.00 | 0.02 |
| Financial leverage ratio | — | — | — | 6.77 | 6.77 |
RH has consistently shown a strong solvency position over the years, as indicated by its low debt-related ratios. The Debt-to-Assets ratio has consistently been at 0.00, demonstrating that the company's total debt is negligible compared to its total assets.
Similarly, the Debt-to-Capital and Debt-to-Equity ratios have also been very low, with values either at 0.00 or not reported. This implies that RH relies little on debt to finance its operations and growth, with most of its capital and equity coming from sources other than debts.
The Financial Leverage ratio, which measures the extent to which the company is using debt to finance its operations, has been stable at around 6.77, indicating that RH has a modest level of financial leverage. This suggests that RH is not overly reliant on debt to support its business activities.
Overall, RH's solvency ratios reflect a prudent financial management strategy, with a focus on maintaining a low level of debt relative to its assets, capital, and equity. This bodes well for the company's financial stability and ability to weather economic downturns.
Coverage ratios
| Jan 31, 2025 | Feb 3, 2024 | Jan 31, 2024 | Jan 31, 2023 | Jan 28, 2023 | |
|---|---|---|---|---|---|
| Interest coverage | 1.40 | 1.65 | 1.70 | 5.22 | 3.63 |
The interest coverage ratio for RH has shown some fluctuations over the past few years. As of January 28, 2023, the interest coverage ratio was 3.63, indicating that the company's operating income was able to cover its interest expenses nearly four times over. Subsequently, the ratio improved to 5.22 by January 31, 2023, signaling increased profitability and a stronger ability to meet interest obligations.
However, there was a noticeable decline in the interest coverage ratio to 1.70 by January 31, 2024, and further down to 1.65 by February 3, 2024, indicating a potential strain on the company's ability to cover its interest payments with operating income alone. This downward trend continued as the ratio dropped to 1.40 by January 31, 2025, suggesting a further deterioration in the company's financial health in terms of meeting interest expenses.
Overall, the fluctuating interest coverage ratios for RH raise concerns about the company's ability to service its debt obligations over the years, particularly as the ratio declined below the commonly recommended threshold of 2.0 in more recent periods. Further analysis and monitoring of RH's financial performance and debt management strategies are advisable to mitigate risks associated with its interest coverage.