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 283,749 -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 189,025 210,761 230,757 230,050 226,032 217,185 207,991 197,058 174,390 153,085 132,935 134,097 136,469 142,770 143,091 141,310 135,655 124,486 112,474 99,177
Interest coverage 1.50 -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)
= $283,749K ÷ $189,025K
= 1.50

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.