Ulta Beauty Inc (ULTA)

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	1,678,030	1,638,610	1,297,490	236,820	901,094
Interest expense	US$ in thousands	-17,622	4,934	1,663	5,735	5,056
Interest coverage		—	332.11	780.21	41.29	178.22

February 3, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $1,678,030K ÷ $-17,622K
= —

The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. A higher interest coverage ratio indicates that the company is better able to meet its interest obligations.

Looking at Ulta Beauty Inc's interest coverage ratio over the past five years, there is a significant fluctuation in the ratio. In fiscal year 2020, the interest coverage ratio was 178.22, indicating a strong ability to cover interest expenses. However, in fiscal year 2021, the ratio dropped to 41.29, suggesting a potential strain on the company's ability to cover interest payments with operating income.

In fiscal years 2022 and 2023, Ulta Beauty Inc saw a substantial improvement in its interest coverage ratio, with ratios of 780.21 and 332.11 respectively. These ratios indicate a significant enhancement in the company's ability to cover interest expenses compared to the previous year.

Overall, the trend in Ulta Beauty Inc's interest coverage ratio shows volatility but with a general improvement in recent years. However, investors and analysts should continue to monitor the ratio to ensure the company maintains a healthy ability to cover its interest obligations.