Scholastic Corporation (SCHL)
Interest coverage
| May 31, 2024 | Feb 29, 2024 | Nov 30, 2023 | Aug 31, 2023 | May 31, 2023 | Feb 28, 2023 | Nov 30, 2022 | Aug 31, 2022 | May 31, 2022 | Feb 28, 2022 | Nov 30, 2021 | Aug 31, 2021 | May 31, 2021 | Feb 28, 2021 | Nov 30, 2020 | Aug 31, 2020 | May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 14,500 | 59,300 | 66,500 | 65,300 | 106,300 | 79,800 | 88,000 | 71,300 | 97,400 | 41,600 | 36,900 | 2,300 | -22,700 | -78,600 | -114,400 | -58,100 | -88,500 | -10,300 | 28,300 | 21,400 |
| Interest expense (ttm) | US$ in thousands | 2,400 | 6,000 | 6,800 | 7,100 | 5,900 | 2,500 | 1,500 | 1,300 | 2,400 | 3,900 | 5,200 | 5,900 | 5,800 | 5,000 | 3,600 | 2,400 | 1,900 | 2,100 | 2,800 | 3,300 |
| Interest coverage | 6.04 | 9.88 | 9.78 | 9.20 | 18.02 | 31.92 | 58.67 | 54.85 | 40.58 | 10.67 | 7.10 | 0.39 | -3.91 | -15.72 | -31.78 | -24.21 | -46.58 | -4.90 | 10.11 | 6.48 |
May 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $14,500K ÷ $2,400K
= 6.04
The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. A higher interest coverage ratio indicates that a company is more capable of covering its interest obligations from its operating income.
Analyzing the historical interest coverage ratios of Scholastic Corporation reveals fluctuations in its ability to cover interest expenses over time. In the recent periods, from May 2021 to May 2024, the interest coverage ratios have generally been healthy, ranging from 6.04 to 58.67. During this period, the company exhibited strong ability to cover its interest payments, with ratios consistently above 6. This indicates a relatively low risk of default on its debt obligations.
It is important to note the drastic decline in the interest coverage ratio in the earlier periods, specifically in November 2020 and prior. The negative ratios in these periods (-3.91 to -46.58) signify that the company's operating income was insufficient to cover its interest expenses, raising concerns about its financial stability and ability to manage debt obligations.
Overall, the recent trend of increasing interest coverage ratios for Scholastic Corporation is a positive indication of its improved financial health and better capacity to fulfill its interest payment responsibilities. However, the company should continue to monitor and maintain sufficient earnings to ensure sustainable coverage of its interest costs in the long term.
Peer comparison
May 31, 2024