Workday Inc (WDAY)

Interest coverage

		Jan 31, 2025	Jan 31, 2024	Jan 31, 2023	Jan 31, 2022	Jan 31, 2021
Earnings before interest and tax (EBIT)	US$ in thousands	415,000	470,000	-157,597	32,784	-206,328
Interest expense	US$ in thousands	114,000	114,000	102,000	16,602	68,806
Interest coverage		3.64	4.12	-1.55	1.97	-3.00

January 31, 2025 calculation

Interest coverage = EBIT ÷ Interest expense
= $415,000K ÷ $114,000K
= 3.64

Based on the data provided, Workday Inc's interest coverage ratio has fluctuated over the past five years.

As of January 31, 2021, the interest coverage ratio was -3.00, indicating that Workday Inc's operating income was insufficient to cover its interest expenses, which is a concerning sign for creditors and investors.

By January 31, 2022, the interest coverage ratio improved to 1.97, suggesting that the company's operating income was able to cover its interest expenses nearly twice over. However, this ratio is still below the ideal threshold of 2 or higher.

In the following year, January 31, 2023, the interest coverage ratio declined to -1.55, signaling a deterioration in the company's ability to cover interest expenses with operating income.

However, by January 31, 2024, the interest coverage ratio significantly improved to 4.12, indicating a strong ability to cover interest expenses with operating income. This improvement may reflect better financial performance or lower interest costs for Workday Inc.

As of January 31, 2025, the interest coverage ratio remained solid at 3.64, showing that the company continued to have a healthy ability to meet its interest obligations.

Overall, Workday Inc's interest coverage ratio has had fluctuations but seems to have stabilized in recent years, showing a decent ability to cover interest expenses with operating income. It is important for stakeholders to monitor this ratio to ensure the company's financial health and ability to meet debt obligations.