Williams-Sonoma Inc (WSM)
Interest coverage
| Jan 31, 2025 | Oct 31, 2024 | Jul 31, 2024 | Apr 30, 2024 | Jan 31, 2024 | Jan 28, 2024 | Oct 31, 2023 | Oct 29, 2023 | Jul 31, 2023 | Jul 30, 2023 | Apr 30, 2023 | Jan 31, 2023 | Jan 29, 2023 | Oct 31, 2022 | Oct 30, 2022 | Jul 31, 2022 | May 1, 2022 | Apr 30, 2022 | Jan 31, 2022 | Jan 30, 2022 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 1,464,528 | 1,393,967 | 1,531,415 | 1,556,576 | 1,547,825 | 1,359,793 | 1,173,250 | 1,057,650 | 1,212,360 | 1,410,599 | 1,419,593 | 1,559,749 | 1,455,483 | 1,309,177 | 1,247,527 | 1,375,335 | 1,534,386 | 1,487,154 | 1,591,362 | 1,394,237 |
| Interest expense (ttm) | US$ in thousands | 0 | 37,995 | 37,995 | 37,995 | 37,995 | 3,335 | 0 | 5,498 | 9,648 | 10,463 | 15,181 | 11,066 | 7,260 | 3,273 | 2,053 | 759 | 504 | 462 | 338 | 288 |
| Interest coverage | — | 36.69 | 40.31 | 40.97 | 40.74 | 407.73 | — | 192.37 | 125.66 | 134.82 | 93.51 | 140.95 | 200.48 | 399.99 | 607.66 | 1,812.04 | 3,044.42 | 3,218.95 | 4,708.17 | 4,841.10 |
January 31, 2025 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,464,528K ÷ $0K
= —
The interest coverage ratio for Williams-Sonoma Inc has exhibited a declining trend over the past few years, indicating potential challenges in meeting interest obligations with operating income.
At the beginning of the analyzed period in January 30, 2022, the interest coverage ratio was robust at 4,841.10, signaling a high level of earnings relative to interest expenses. However, this ratio gradually decreased to 3,044.42 in May 1, 2022, and further plummeted to 36.69 by October 31, 2024, reflecting a substantial deterioration in the company's ability to cover interest payments from its operating profits.
The declining trend in interest coverage raises concerns about Williams-Sonoma Inc's financial health and ability to service its debt obligations comfortably. It indicates a potential strain on cash flow from operations to meet interest expenses, which could lead to liquidity problems or even default risk if not addressed effectively.
To improve its financial position, Williams-Sonoma Inc may need to closely monitor its interest coverage ratio, take measures to enhance profitability, manage debt levels prudently, and explore options to boost earnings and cash flow generation to ensure sustainable debt servicing capacity in the long run.