Toll Brothers Inc (TOL)

Interest coverage

		Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019
Earnings before interest and tax (EBIT)	US$ in thousands	1,724,760	1,508,630	1,020,880	550,260	787,170
Interest expense	US$ in thousands	—	141,234	120,477	2,440	0
Interest coverage		—	10.68	8.47	225.52	—

October 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $1,724,760K ÷ $—K
= —

Based on the provided data, I can see that Toll Brothers Inc. didn't report their interest coverage ratio for the years ending on October 31, 2023 and October 31, 2019. However, the interest coverage ratio for the years ending on October 31, 2021 and October 31, 2020 was 6.87 and 4.24, respectively.

The interest coverage ratio is calculated by dividing the earnings before interest and taxes (EBIT) by the interest expense. A higher ratio indicates that the company is more capable of meeting its interest payment obligations.

The significant increase in the interest coverage ratio from 4.24 in 2020 to 6.87 in 2021 suggests that Toll Brothers Inc. had a better ability to cover its interest expenses in 2021. The absence of data for 2019 and 2023 limits the ability to trace the trend, but it is evident that the company's interest coverage has improved based on the available data.

It is important to note that a strong interest coverage ratio signifies that the company is in a better position to meet its interest obligations from its operating income. However, it should be analyzed in conjunction with other financial metrics to gain a comprehensive understanding of the company's financial health and ability to service its debt.