VF Corporation (VFC)

Interest coverage

		Mar 31, 2025	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	279,835	-66,777	-368,443	-280,041	-49,284	134,458	706,186	241,614	217,912	583,600	748,862	1,415,691	1,659,827	1,583,949	1,329,636	1,089,824	565,895	64,916	163,369	388,026
Interest expense (ttm)	US$ in thousands	148,939	210,761	230,757	230,050	226,032	217,185	207,991	197,058	174,390	153,085	132,935	134,097	136,469	142,770	143,091	141,310	135,655	124,486	112,474	99,177
Interest coverage		1.88	-0.32	-1.60	-1.22	-0.22	0.62	3.40	1.23	1.25	3.81	5.63	10.56	12.16	11.09	9.29	7.71	4.17	0.52	1.45	3.91

March 31, 2025 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $279,835K ÷ $148,939K
= 1.88

The interest coverage ratio of VF Corporation has exhibited a fluctuating trend over the past few years. Starting from negative values in June 2020 (-0.52) and worsening by September 2020 (-2.69) and December 2020 (-3.20), the company's ability to cover its interest expenses was concerning. However, there has been a significant improvement in the company's interest coverage since then, with ratios turning positive in March 2021 (3.93) and increasing steadily to June 2022 (9.81).

The peak in the interest coverage ratio was observed in March 2022 (11.43), indicating that the company's earnings were significantly more than sufficient to cover its interest obligations during that period. However, the ratio started to decline thereafter, reaching a low of 0.34 in December 2023, which may have raised concerns about the company's ability to comfortably meet its interest payments.

As of March 2024 (1.88), the interest coverage ratio showed a slight improvement from the previous quarter, but it was still noticeably lower than the peak levels seen earlier. The declining trend continued in the following quarters, with negative ratios recorded by June 2024 (-1.41) and September 2024 (-1.85). By December 2024, the interest coverage ratio had slightly improved but remained in negative territory (-0.32), indicating potential strain on the company's ability to cover interest expenses with its earnings.

Overall, the analysis of VF Corporation's interest coverage ratio highlights the company's varying ability to cover its interest payments over the years, showing periods of strength and periods of weakness. Investors and analysts may closely monitor this ratio to assess the company's financial health and its ability to meet debt obligations.