Signet Jewelers Ltd (SIG)
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 | 621,500 | 464,700 | 901,300 | -57,700 | 165,300 |
| Interest expense | US$ in thousands | — | 13,500 | 16,900 | 32,000 | 35,600 |
| Interest coverage | — | 34.42 | 53.33 | -1.80 | 4.64 |
February 3, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $621,500K ÷ $—K
= —
Signet Jewelers Ltd's interest coverage ratio has fluctuated significantly over the past five years. In fiscal year 2020, the company had an interest coverage ratio of 4.64, indicating that it was able to cover its interest expenses approximately 4.64 times using its operating income.
However, in fiscal year 2021, the interest coverage ratio dropped to -1.80, which suggests that the company's operating income was not sufficient to cover its interest expenses during that year. This could be a cause for concern as it indicates that Signet Jewelers Ltd had financial difficulties meeting its interest obligations.
The following years showed a significant improvement in the interest coverage ratio, with ratios of 53.33 in fiscal year 2022 and 34.42 in fiscal year 2023. These higher ratios indicate a healthier financial position, as the company was able to cover its interest expenses more comfortably with its operating income.
Overall, Signet Jewelers Ltd's interest coverage has shown volatility in recent years, with fluctuations that may signal varying levels of financial risk and operational efficiency. It will be important for stakeholders to monitor this ratio closely to assess the company's ability to meet its interest obligations in the future.