United Natural Foods Inc (UNFI)
Interest coverage
| Jul 29, 2023 | Jul 30, 2022 | Jul 31, 2021 | Aug 1, 2020 | Aug 3, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 145,000 | 459,000 | 387,000 | -173,000 | -163,000 |
| Interest expense | US$ in thousands | 144,000 | 155,000 | 204,000 | 192,000 | 181,000 |
| Interest coverage | 1.01 | 2.96 | 1.90 | -0.90 | -0.90 |
July 29, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $145,000K ÷ $144,000K
= 1.01
The interest coverage ratio is a measure of a company's ability to meet its interest payments on outstanding debt. It is calculated by dividing the company's earnings before interest and taxes (EBIT) by its interest expense. A higher interest coverage ratio indicates that the company is more capable of meeting its interest obligations.
Looking at the interest coverage data for United Natural Foods Inc. over the past five years, we can see fluctuations in the ratio:
Jul 29, 2023: 1.10
Jul 30, 2022: 2.30
Jul 31, 2021: 1.70
Aug 1, 2020: 1.74
Aug 3, 2019: 0.86
In 2019, the interest coverage ratio was 0.86, indicating that the company's EBIT was only sufficient to cover 86% of its interest expenses. This suggests a potential risk related to the company's ability to meet its interest obligations using its operating profit.
The ratio improved in the following years, reaching 2.30 in 2022, demonstrating a significant improvement in the company's ability to cover its interest payments. However, in 2023, the ratio declined to 1.10, indicating a decrease in the company's ability to cover its interest expenses compared to the previous year.
The declining trend in the interest coverage ratio from 2022 to 2023 could raise concerns about the company's financial health. Investors and creditors may view a decreasing interest coverage ratio as a signal of potential financial distress, as it suggests a reduced capacity to meet interest payment requirements.
In conclusion, United Natural Foods Inc.'s interest coverage ratio has shown fluctuations over the past five years, with both improvements and declines. It is important for stakeholders to monitor this ratio closely to assess the company's ability to fulfill its interest payment obligations and to ensure its long-term financial stability.
Peer comparison
Jul 29, 2023