RH (RH)

Interest coverage

Feb 3, 2024 Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020
Earnings before interest and tax (EBIT) US$ in thousands 393,721 550,494 887,051 445,663 356,359
Interest expense US$ in thousands 237,899 151,730 64,947 69,250 87,177
Interest coverage 1.65 3.63 13.66 6.44 4.09

February 3, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $393,721K ÷ $237,899K
= 1.65

The interest coverage ratio for RH has fluctuated over the past five years. In the most recent period ending February 3, 2024, the interest coverage ratio stands at 1.65, indicating that RH's ability to cover its interest expenses with its operating income has weakened compared to the previous year. This decrease may raise concerns about RH's ability to comfortably meet its interest obligations using its current level of operating income.

Comparing the current ratio to historical data, there is a notable decline from the high levels seen in January 29, 2022, and January 30, 2021, where the interest coverage ratios were 13.66 and 6.44, respectively. This indicates a significant reduction in RH's ability to cover its interest payments from its operating income. However, the current ratio still remains above the ratio observed on February 1, 2020, which was 4.09, suggesting that RH's interest coverage has historically been stronger than the most recent period.

Overall, the decreasing trend in RH's interest coverage ratio raises concerns about the company's ability to service its interest payments. Further analysis of the company's financial health and operational performance may be necessary to fully assess the impact of this trend on RH's financial stability.


Peer comparison

Feb 3, 2024

Company name
Symbol
Interest coverage
RH
RH
1.65
Haverty Furniture Companies Inc
HVT

See also:

RH Interest Coverage