Urban Outfitters Inc (URBN)

Interest coverage

		Jan 31, 2024	Jan 31, 2023	Jan 31, 2022	Jan 31, 2021	Jan 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	389,269	222,594	405,735	6,918	240,922
Interest expense	US$ in thousands	7,662	1,315	1,104	3,405	1,202
Interest coverage		50.81	169.27	367.51	2.03	200.43

January 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $389,269K ÷ $7,662K
= 50.81

The interest coverage ratio of Urban Outfitters Inc has shown significant fluctuations over the past five years. In January 2024, the company's interest coverage ratio was 50.81, indicating that Urban Outfitters was able to cover its interest expenses by nearly 51 times. This represents a decline from the previous year, where the ratio was 169.27, signifying a substantial decrease in the ability of the company to cover its interest payments.

Comparing the current ratio to the one from two years ago, in January 2022, Urban Outfitters had an interest coverage ratio of 367.51, showcasing a sharp decline from the current year. This suggests a substantial weakening in the company's ability to meet its interest obligations over the two-year period.

The interest coverage ratio for January 2021 was 2.03, indicating that Urban Outfitters barely covered its interest expenses during that period. This was a significant drop from the previous year, where the ratio was much stronger at 200.43, highlighting a notable deterioration in covering interest payments.

Overall, the fluctuating trend of Urban Outfitters Inc's interest coverage ratio over the past five years suggests varying levels of financial stability and ability to meet its interest obligations. It is essential for the company to closely monitor and manage its financial leverage to ensure sustainable performance and financial health in the future.