Scholastic Corporation (SCHL)
Interest coverage
| May 31, 2025 | Feb 28, 2025 | Nov 30, 2024 | Aug 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 15,900 | 10,000 | -7,400 | 28,100 | 15,600 | 63,900 | 71,500 | 61,300 | 97,900 | 56,200 | 63,700 | 32,100 | 57,700 | 13,500 | 26,600 | 14,500 | 300 | -93,425 | -95,925 | -41,825 |
| Interest expense (ttm) | US$ in thousands | 16,000 | 11,700 | 8,000 | 4,000 | 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 |
| Interest coverage | 0.99 | 0.85 | -0.92 | 7.02 | 6.50 | 10.65 | 10.51 | 8.63 | 16.59 | 22.48 | 42.47 | 24.69 | 24.04 | 3.46 | 5.12 | 2.46 | 0.05 | -18.68 | -26.65 | -17.43 |
May 31, 2025 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $15,900K ÷ $16,000K
= 0.99
The analysis of Scholastic Corporation's interest coverage ratios over the reported periods reveals significant fluctuations, indicating variable capacity to meet interest obligations. The interest coverage ratio, calculated as EBIT divided by interest expense, was markedly negative from August 2020 through February 2021, with values of −17.43, −26.65, and −18.68 respectively, suggesting substantial difficulties in generating sufficient earnings to cover interest expenses during that interval.
A dramatic improvement commenced by May 2021, when the ratio approached a positive value of 0.05, signaling a potential shift towards better earnings coverage. This trend continued into August 2021 with a ratio of 2.46, indicating that EBIT was now more than twice the interest expense, and further strengthened to 5.12 by November 2021 and 3.46 in February 2022. The peak of the observed period occurred around May 2022, with an interest coverage ratio of 24.04, exemplifying a robust capacity to meet interest obligations.
Subsequently, the ratios remained high, with values of 24.69 in August 2022 and 42.47 in November 2022, implying strong earnings relative to interest expenses. Although the ratio decreased to 22.48 by February 2023 and further to 16.59 in May 2023, these still reflect a healthy interest coverage status. However, a declining trend is observable afterward, with ratios dropping to 8.63 in August 2023, 10.51 in November 2023, and 10.65 in February 2024, signaling some weakening in earnings capacity to cover interest.
The most recent data points show a continued decline, with ratios of 6.50 in May 2024 and 7.02 in August 2024, returning to near moderate levels. Notably, the interest coverage ratio becomes negative again at the end of 2024, with a value of −0.92 in November 2024, indicating that earnings were insufficient to cover interest expenses during that period. Early 2025 data reflect slight recovery, with ratios of 0.85 in February and 0.99 in May, although still close to breakeven. The ratio again approaches 1.0 at the end of the period, at 0.85 in February 2025.
Overall, the interest coverage ratio of Scholastic Corporation demonstrates a period of substantial financial distress from mid-2020 to early 2021, followed by a sustained phase of improved earnings capacity through late 2022, peaking at high levels. However, since mid-2023, there has been a notable decline, culminating in near breakeven and negative ratios in late 2024, indicating potential concerns regarding the company's ability to reliably service its interest obligations in the most recent periods.
Peer comparison
May 31, 2025