RH (RH)
Interest coverage
| Jan 31, 2025 | Oct 31, 2024 | Jul 31, 2024 | Apr 30, 2024 | Feb 3, 2024 | Jan 31, 2024 | Oct 31, 2023 | Oct 28, 2023 | Jul 31, 2023 | Jul 29, 2023 | Apr 30, 2023 | Apr 29, 2023 | Jan 31, 2023 | Jan 28, 2023 | Oct 29, 2022 | Jul 31, 2022 | Jul 30, 2022 | Apr 30, 2022 | Jan 31, 2022 | Jan 29, 2022 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 328,367 | 364,020 | 328,883 | 284,433 | 266,808 | 329,027 | 410,840 | 474,166 | 529,634 | 498,789 | 471,724 | 521,546 | 636,990 | 706,504 | 646,121 | 688,044 | 680,208 | 729,870 | 920,887 | 958,838 |
| Interest expense (ttm) | US$ in thousands | 233,450 | 274,562 | 279,480 | 274,007 | 270,809 | 216,210 | 198,124 | 183,300 | 168,476 | 177,134 | 167,386 | 158,987 | 145,435 | 118,619 | 104,800 | 98,218 | 96,789 | 83,748 | 76,116 | 64,862 |
| Interest coverage | 1.41 | 1.33 | 1.18 | 1.04 | 0.99 | 1.52 | 2.07 | 2.59 | 3.14 | 2.82 | 2.82 | 3.28 | 4.38 | 5.96 | 6.17 | 7.01 | 7.03 | 8.72 | 12.10 | 14.78 |
January 31, 2025 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $328,367K ÷ $233,450K
= 1.41
The interest coverage ratio of RH has been declining over time based on the data provided. It measures the company's ability to cover its interest expenses with its operating income. A higher ratio indicates that the company is more capable of meeting its interest obligations.
RH's interest coverage ratio was 14.78 as of January 29, 2022, which indicates a strong ability to cover interest payments. However, the ratio has decreased to 1.41 as of January 31, 2025, which signifies a significant decline in the company's ability to cover its interest expenses.
The decreasing trend in the interest coverage ratio could be a cause for concern as it may indicate increasing financial risk for RH. It suggests that the company's operating income may not be sufficient to cover its interest payments, which could lead to potential financial difficulties or constraints in meeting debt obligations in the future.
Management should closely monitor this ratio and take necessary actions to improve the company's financial position, such as increasing operating income, reducing interest expenses, or refinancing debt to ensure long-term financial stability.