Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Debt Ratios
Coverage Ratios
Deckers Outdoor Corp., solvency ratios
Based on: 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31).
The solvency profile exhibits a high degree of financial stability characterized by minimal reliance on external debt and an exceptional capacity to meet long-term obligations. While a notable shift occurred in the reporting of liabilities during the 2020 fiscal year, the overall trajectory indicates a conservative capital structure and strengthening creditworthiness over the six-year period.
- Debt-to-Equity and Debt-to-Capital Ratios
- A consistent pattern of low leverage is observed. Traditional debt-to-equity and debt-to-capital ratios remained stagnant at 0.03 through 2020. However, when operating lease liabilities are included, a significant spike is noted in March 2020, where the debt-to-equity ratio rose to 0.26 and the debt-to-capital ratio reached 0.21. Following this peak, these ratios trended downward, stabilizing at 0.14 for debt-to-equity and 0.12 for debt-to-capital by March 2023, suggesting a controlled expansion of lease-based obligations relative to equity and total capital.
- Debt-to-Assets and Financial Leverage
- The debt-to-assets ratio mirrors the trend seen in equity ratios, showing a sharp increase to 0.17 in 2020 when including lease liabilities, before settling at 0.10 from 2021 through 2023. Financial leverage remained relatively stable, fluctuating between a low of 1.34 in 2018 and a peak of 1.55 in 2020, eventually moderating to 1.45 by 2023. This indicates a balanced approach to asset financing with minimal risk of insolvency.
- Coverage Ratios
- The most pronounced improvement is evident in the coverage ratios. Interest coverage grew exponentially from 49.13 in 2018 to a peak of 272.07 in 2022, ending at 194.52 in 2023. Similarly, the fixed charge coverage ratio demonstrates a consistent upward trend, rising from 3.76 in 2018 to 12.81 in 2023. These figures reflect a substantial increase in the margin of safety for servicing both interest and fixed contractual obligations, driven by strong operational performance.
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Debt to Equity
Deckers Outdoor Corp., debt to equity calculation, comparison to benchmarks
| Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Short-term borrowings | —) | —) | —) | 638) | 603) | 578) | |
| Mortgage payable | —) | —) | —) | 30,263) | 30,901) | 31,504) | |
| Total debt | —) | —) | —) | 30,901) | 31,504) | 32,082) | |
| Stockholders’ equity | 1,765,733) | 1,538,825) | 1,444,225) | 1,140,120) | 1,045,130) | 940,779) | |
| Solvency Ratio | |||||||
| Debt to equity1 | 0.00 | 0.00 | 0.00 | 0.03 | 0.03 | 0.03 | |
| Benchmarks | |||||||
| Debt to Equity, Competitors2 | |||||||
| lululemon athletica inc. | 0.00 | 0.00 | 0.00 | — | — | — | |
| Nike Inc. | 0.64 | 0.62 | 0.74 | — | — | — | |
| Debt to Equity, Sector | |||||||
| Consumer Durables & Apparel | 0.52 | 0.52 | 0.61 | — | — | — | |
| Debt to Equity, Industry | |||||||
| Consumer Discretionary | 1.34 | 1.51 | 1.50 | — | — | — | |
Based on: 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31).
1 2023 Calculation
Debt to equity = Total debt ÷ Stockholders’ equity
= 0 ÷ 1,765,733 = 0.00
2 Click competitor name to see calculations.
An evaluation of the solvency position reveals a highly conservative capital structure characterized by minimal reliance on borrowed funds and substantial growth in shareholder value.
- Total Debt Trends
- A marginal decrease in total debt is observed between March 31, 2018, and March 31, 2020, with values declining from US$ 32,082 thousand to US$ 30,901 thousand. This indicates a consistent trajectory of maintaining low liabilities.
- Stockholders' Equity Growth
- Stockholders' equity demonstrates a robust and continuous upward trend throughout the period ending March 31, 2023. Equity grew from US$ 940,779 thousand in 2018 to US$ 1,765,733 thousand in 2023, representing a significant expansion of the company's internal capital base.
- Debt to Equity Ratio Analysis
- The debt to equity ratio remained stable at 0.03 from 2018 through 2020. This exceptionally low ratio signifies that the organization is primarily equity-funded, resulting in a low financial risk profile and a strong capacity to meet long-term obligations.
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Debt to Equity (including Operating Lease Liability)
Deckers Outdoor Corp., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Short-term borrowings | —) | —) | —) | 638) | 603) | 578) | |
| Mortgage payable | —) | —) | —) | 30,263) | 30,901) | 31,504) | |
| Total debt | —) | —) | —) | 30,901) | 31,504) | 32,082) | |
| Current portion of operating lease liabilities | 50,765) | 50,098) | 46,768) | 49,091) | —) | —) | |
| Long-term operating lease liabilities | 195,723) | 171,972) | 176,274) | 215,724) | —) | —) | |
| Total debt (including operating lease liability) | 246,488) | 222,070) | 223,042) | 295,716) | 31,504) | 32,082) | |
| Stockholders’ equity | 1,765,733) | 1,538,825) | 1,444,225) | 1,140,120) | 1,045,130) | 940,779) | |
| Solvency Ratio | |||||||
| Debt to equity (including operating lease liability)1 | 0.14 | 0.14 | 0.15 | 0.26 | 0.03 | 0.03 | |
| Benchmarks | |||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | |||||||
| lululemon athletica inc. | 0.34 | 0.32 | 0.31 | — | — | — | |
| Nike Inc. | 0.87 | 0.83 | 1.00 | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | |||||||
| Consumer Durables & Apparel | 0.77 | 0.75 | 0.89 | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | |||||||
| Consumer Discretionary | 1.69 | 1.90 | 1.87 | — | — | — | |
Based on: 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31).
1 2023 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Stockholders’ equity
= 246,488 ÷ 1,765,733 = 0.14
2 Click competitor name to see calculations.
The solvency profile is characterized by a substantial and growing equity base, which has effectively neutralized the impact of increased liabilities. While a significant shift in the debt structure occurred in 2020, the overall leverage remains conservative throughout the analyzed period.
- Total Debt Trends
- Total debt, including operating lease liabilities, remained low and stable between 2018 and 2019. A sharp escalation occurred on March 31, 2020, with liabilities increasing to 295.7 million. This was followed by a reduction to 223 million in 2021 and a relative stabilization, ending at 246.5 million by March 31, 2023.
- Stockholders' Equity Performance
- A consistent and strong upward trend is observed in stockholders' equity. Value increased steadily from 940.8 million in 2018 to 1.77 billion in 2023. This continuous growth indicates a robust internal accumulation of capital, providing a significant buffer against total liabilities.
- Debt to Equity Ratio Analysis
- The debt-to-equity ratio was minimal at 0.03 during the first two years of the period. A peak of 0.26 was recorded in 2020, reflecting the sudden increase in total debt. Subsequently, the ratio declined and stabilized at 0.14 by 2022 and 2023, demonstrating a disciplined approach to leverage and a strong reliance on equity financing.
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Debt to Capital
Deckers Outdoor Corp., debt to capital calculation, comparison to benchmarks
| Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Short-term borrowings | —) | —) | —) | 638) | 603) | 578) | |
| Mortgage payable | —) | —) | —) | 30,263) | 30,901) | 31,504) | |
| Total debt | —) | —) | —) | 30,901) | 31,504) | 32,082) | |
| Stockholders’ equity | 1,765,733) | 1,538,825) | 1,444,225) | 1,140,120) | 1,045,130) | 940,779) | |
| Total capital | 1,765,733) | 1,538,825) | 1,444,225) | 1,171,021) | 1,076,634) | 972,861) | |
| Solvency Ratio | |||||||
| Debt to capital1 | 0.00 | 0.00 | 0.00 | 0.03 | 0.03 | 0.03 | |
| Benchmarks | |||||||
| Debt to Capital, Competitors2 | |||||||
| lululemon athletica inc. | 0.00 | 0.00 | 0.00 | — | — | — | |
| Nike Inc. | 0.39 | 0.38 | 0.42 | — | — | — | |
| Debt to Capital, Sector | |||||||
| Consumer Durables & Apparel | 0.34 | 0.34 | 0.38 | — | — | — | |
| Debt to Capital, Industry | |||||||
| Consumer Discretionary | 0.57 | 0.60 | 0.60 | — | — | — | |
Based on: 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31).
1 2023 Calculation
Debt to capital = Total debt ÷ Total capital
= 0 ÷ 1,765,733 = 0.00
2 Click competitor name to see calculations.
The financial data indicates a strengthening solvency position characterized by a substantial increase in the capital base and a disciplined approach to debt management.
- Total Capital Trends
- A consistent growth pattern in total capital is observed from 2018 through 2023. Total capital rose from US$ 972.86 million on March 31, 2018, to US$ 1.76 billion by March 31, 2023. This steady expansion suggests a significant increase in the overall funding base over the six-year period.
- Debt to Capital and Leverage Analysis
- Between 2018 and 2020, total debt experienced a gradual decline, moving from US$ 32.08 million to US$ 30.90 million. During this same interval, the debt to capital ratio remained constant at 0.03. This indicates that debt comprised only 3% of the total capital structure, reflecting a very low reliance on borrowed funds and a conservative leverage profile.
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Debt to Capital (including Operating Lease Liability)
Deckers Outdoor Corp., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Short-term borrowings | —) | —) | —) | 638) | 603) | 578) | |
| Mortgage payable | —) | —) | —) | 30,263) | 30,901) | 31,504) | |
| Total debt | —) | —) | —) | 30,901) | 31,504) | 32,082) | |
| Current portion of operating lease liabilities | 50,765) | 50,098) | 46,768) | 49,091) | —) | —) | |
| Long-term operating lease liabilities | 195,723) | 171,972) | 176,274) | 215,724) | —) | —) | |
| Total debt (including operating lease liability) | 246,488) | 222,070) | 223,042) | 295,716) | 31,504) | 32,082) | |
| Stockholders’ equity | 1,765,733) | 1,538,825) | 1,444,225) | 1,140,120) | 1,045,130) | 940,779) | |
| Total capital (including operating lease liability) | 2,012,221) | 1,760,895) | 1,667,267) | 1,435,836) | 1,076,634) | 972,861) | |
| Solvency Ratio | |||||||
| Debt to capital (including operating lease liability)1 | 0.12 | 0.13 | 0.13 | 0.21 | 0.03 | 0.03 | |
| Benchmarks | |||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | |||||||
| lululemon athletica inc. | 0.25 | 0.24 | 0.24 | — | — | — | |
| Nike Inc. | 0.46 | 0.45 | 0.50 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | |||||||
| Consumer Durables & Apparel | 0.44 | 0.43 | 0.47 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | |||||||
| Consumer Discretionary | 0.63 | 0.65 | 0.65 | — | — | — | |
Based on: 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31).
1 2023 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 246,488 ÷ 2,012,221 = 0.12
2 Click competitor name to see calculations.
The solvency profile indicates a period of significant expansion in total capital coupled with a temporary spike in leverage during the 2020 fiscal year. Over the six-year period ending March 31, 2023, total capital grew consistently, more than doubling from 972.86 million to 2.01 billion, suggesting a substantial increase in the organization's overall funding base.
- Total Debt and Lease Liability Trends
- A substantial increase in total debt occurred between March 31, 2019, and March 31, 2020, where obligations rose from 31.50 million to 295.72 million. Following this peak, debt levels decreased to 223.04 million in 2021 and remained relatively stable at 222.07 million in 2022, before a moderate increase to 246.49 million in 2023.
- Total Capital Growth
- Total capital exhibited an uninterrupted upward trajectory throughout the analysis period. The most significant growth phases occurred between 2020 and 2023, as the capital base expanded from 1.44 billion to 2.01 billion, effectively diluting the impact of the increased debt load.
- Debt to Capital Ratio Analysis
- The debt to capital ratio remained minimal at 0.03 through 2019, reflecting a highly conservative leverage position. The ratio peaked at 0.21 in 2020, coinciding with the sharp increase in total debt. In subsequent years, the ratio trended downward, settling at 0.13 in 2021 and 2022, and further improving to 0.12 by March 31, 2023. This trend demonstrates a successful effort to stabilize leverage relative to the growth of the total capital base.
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Debt to Assets
Deckers Outdoor Corp., debt to assets calculation, comparison to benchmarks
| Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Short-term borrowings | —) | —) | —) | 638) | 603) | 578) | |
| Mortgage payable | —) | —) | —) | 30,263) | 30,901) | 31,504) | |
| Total debt | —) | —) | —) | 30,901) | 31,504) | 32,082) | |
| Total assets | 2,556,203) | 2,332,250) | 2,167,705) | 1,765,118) | 1,427,206) | 1,264,379) | |
| Solvency Ratio | |||||||
| Debt to assets1 | 0.00 | 0.00 | 0.00 | 0.02 | 0.02 | 0.03 | |
| Benchmarks | |||||||
| Debt to Assets, Competitors2 | |||||||
| lululemon athletica inc. | 0.00 | 0.00 | 0.00 | — | — | — | |
| Nike Inc. | 0.24 | 0.23 | 0.25 | — | — | — | |
| Debt to Assets, Sector | |||||||
| Consumer Durables & Apparel | 0.21 | 0.21 | 0.22 | — | — | — | |
| Debt to Assets, Industry | |||||||
| Consumer Discretionary | 0.34 | 0.35 | 0.36 | — | — | — | |
Based on: 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31).
1 2023 Calculation
Debt to assets = Total debt ÷ Total assets
= 0 ÷ 2,556,203 = 0.00
2 Click competitor name to see calculations.
The solvency profile exhibits a strong trend toward reduced financial leverage and substantial asset growth. The overall capital structure indicates a conservative approach to debt management, characterized by a minimal reliance on borrowed funds relative to the scale of operations.
- Total Debt Trends
- A gradual decline in total debt is observed between March 31, 2018, and March 31, 2020, with balances decreasing from US$ 32,082 thousand to US$ 30,901 thousand. This downward trajectory suggests a consistent reduction in outstanding liabilities during this period.
- Asset Expansion
- Total assets demonstrate significant and continuous growth over the reported six-year period. From March 31, 2018, to March 31, 2023, assets increased from US$ 1,264,379 thousand to US$ 2,556,203 thousand, indicating a robust expansion of the resource base.
- Debt to Assets Ratio Analysis
- The debt to assets ratio decreased from 0.03 in 2018 to 0.02 in 2019 and remained stable at 0.02 through March 31, 2020. This extremely low ratio confirms that a negligible fraction of the organization's assets are financed through debt, reflecting a high degree of solvency and minimal financial risk.
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Debt to Assets (including Operating Lease Liability)
Deckers Outdoor Corp., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Short-term borrowings | —) | —) | —) | 638) | 603) | 578) | |
| Mortgage payable | —) | —) | —) | 30,263) | 30,901) | 31,504) | |
| Total debt | —) | —) | —) | 30,901) | 31,504) | 32,082) | |
| Current portion of operating lease liabilities | 50,765) | 50,098) | 46,768) | 49,091) | —) | —) | |
| Long-term operating lease liabilities | 195,723) | 171,972) | 176,274) | 215,724) | —) | —) | |
| Total debt (including operating lease liability) | 246,488) | 222,070) | 223,042) | 295,716) | 31,504) | 32,082) | |
| Total assets | 2,556,203) | 2,332,250) | 2,167,705) | 1,765,118) | 1,427,206) | 1,264,379) | |
| Solvency Ratio | |||||||
| Debt to assets (including operating lease liability)1 | 0.10 | 0.10 | 0.10 | 0.17 | 0.02 | 0.03 | |
| Benchmarks | |||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | |||||||
| lululemon athletica inc. | 0.19 | 0.18 | 0.19 | — | — | — | |
| Nike Inc. | 0.32 | 0.31 | 0.34 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | |||||||
| Consumer Durables & Apparel | 0.31 | 0.30 | 0.32 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | |||||||
| Consumer Discretionary | 0.43 | 0.44 | 0.44 | — | — | — | |
Based on: 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31).
1 2023 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 246,488 ÷ 2,556,203 = 0.10
2 Click competitor name to see calculations.
An analysis of the solvency position indicates a period of consistent asset expansion coupled with a structural shift in debt obligations between 2018 and 2023.
- Total Asset Growth
- Total assets exhibited a continuous upward trajectory, increasing from US$ 1.26 billion in 2018 to US$ 2.56 billion by 2023. This represents a steady growth pattern, effectively doubling the asset base over the six-year period.
- Debt Obligation Trends
- Total debt, including operating lease liabilities, remained minimal during 2018 and 2019. A significant escalation occurred in 2020, where debt peaked at US$ 295.7 million. Subsequently, these obligations moderated and stabilized, fluctuating between US$ 222 million and US$ 246 million from 2021 through 2023.
- Debt to Assets Ratio Interpretation
- The solvency ratio mirrors the volatility in debt levels, shifting from a negligible 0.02 to 0.03 range in 2018 and 2019 to a peak of 0.17 in 2020. From 2021 onward, the ratio has remained remarkably stable at 0.10, suggesting a controlled leverage strategy where debt finances only 10% of total assets.
The financial profile demonstrates a conservative approach to leverage. Despite the sharp increase in debt observed in 2020, the simultaneous growth in assets has allowed the company to maintain a strong solvency position with a low and stable debt-to-asset dependency in recent years.
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Financial Leverage
Deckers Outdoor Corp., financial leverage calculation, comparison to benchmarks
| Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Total assets | 2,556,203) | 2,332,250) | 2,167,705) | 1,765,118) | 1,427,206) | 1,264,379) | |
| Stockholders’ equity | 1,765,733) | 1,538,825) | 1,444,225) | 1,140,120) | 1,045,130) | 940,779) | |
| Solvency Ratio | |||||||
| Financial leverage1 | 1.45 | 1.52 | 1.50 | 1.55 | 1.37 | 1.34 | |
| Benchmarks | |||||||
| Financial Leverage, Competitors2 | |||||||
| lululemon athletica inc. | 1.78 | 1.80 | 1.64 | — | — | — | |
| Nike Inc. | 2.68 | 2.64 | 2.96 | — | — | — | |
| Financial Leverage, Sector | |||||||
| Consumer Durables & Apparel | 2.51 | 2.51 | 2.74 | — | — | — | |
| Financial Leverage, Industry | |||||||
| Consumer Discretionary | 3.95 | 4.32 | 4.22 | — | — | — | |
Based on: 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31).
1 2023 Calculation
Financial leverage = Total assets ÷ Stockholders’ equity
= 2,556,203 ÷ 1,765,733 = 1.45
2 Click competitor name to see calculations.
The financial position from 2018 to 2023 is characterized by a sustained expansion of the balance sheet, with both total assets and stockholders' equity exhibiting consistent upward trajectories. Total assets grew from US$ 1,264,379 thousand in 2018 to US$ 2,556,203 thousand by 2023, representing a significant increase in the company's resource base. This growth was supported by a concurrent increase in stockholders' equity, which rose from US$ 940,779 thousand to US$ 1,765,733 thousand, suggesting a robust accumulation of equity to fund operational expansion.
- Asset and Equity Expansion
- A continuous year-over-year increase is observed in total assets throughout the analyzed period. Stockholders' equity mirrored this growth pattern, expanding steadily each year, which indicates a strong internal capacity to support asset growth without an over-reliance on external liabilities.
- Financial Leverage Volatility
- The financial leverage ratio experienced a period of increase between 2018 and 2020, rising from 1.34 to a peak of 1.55. This indicates a temporary increase in the proportion of debt relative to equity during that window.
- Leverage Stabilization and Reduction
- Following the 2020 peak, a downward trend in financial leverage is observed. The ratio declined to 1.50 in 2021 and further to 1.45 by March 31, 2023. This reduction in the leverage ratio, occurring alongside a continuing increase in total assets, suggests a strategic move toward a more conservative capital structure and improved solvency.
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Interest Coverage
Deckers Outdoor Corp., interest coverage calculation, comparison to benchmarks
| Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net income | 516,822) | 451,949) | 382,575) | 276,142) | 264,308) | 114,394) | |
| Add: Income tax expense | 149,260) | 112,689) | 118,939) | 64,724) | 64,626) | 106,302) | |
| Add: Interest expense | 3,442) | 2,083) | 6,028) | 5,046) | 4,661) | 4,585) | |
| Earnings before interest and tax (EBIT) | 669,524) | 566,721) | 507,542) | 345,912) | 333,595) | 225,281) | |
| Solvency Ratio | |||||||
| Interest coverage1 | 194.52 | 272.07 | 84.20 | 68.55 | 71.57 | 49.13 | |
| Benchmarks | |||||||
| Interest Coverage, Competitors2 | |||||||
| lululemon athletica inc. | — | — | — | — | — | — | |
| Nike Inc. | 22.31 | 23.24 | 23.50 | — | — | — | |
| Interest Coverage, Sector | |||||||
| Consumer Durables & Apparel | 26.89 | 27.71 | 26.27 | — | — | — | |
| Interest Coverage, Industry | |||||||
| Consumer Discretionary | 12.23 | 9.30 | 13.23 | — | — | — | |
Based on: 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31).
1 2023 Calculation
Interest coverage = EBIT ÷ Interest expense
= 669,524 ÷ 3,442 = 194.52
2 Click competitor name to see calculations.
The analysis of solvency ratios indicates a substantial strengthening of the financial position between 2018 and 2023. A consistent increase in operating profitability, coupled with a general reduction in interest obligations relative to earnings, has resulted in an exceptionally high capacity to service debt.
- Earnings Before Interest and Tax (EBIT)
- A sustained upward trajectory in EBIT is observed, growing from US$ 225,281 thousand in 2018 to US$ 669,524 thousand in 2023. This steady expansion of operating income provides a robust cushion for all fixed financial obligations and reflects strong operational growth over the six-year period.
- Interest Expense
- Interest expenses remained relatively stable from 2018 through 2021, reaching a peak of US$ 6,028 thousand. A significant contraction occurred in 2022, with expenses dropping to US$ 2,083 thousand, followed by a moderate increase to US$ 3,442 thousand in 2023. This fluctuation suggests a potential restructuring of debt or a reduction in total borrowings during the 2022 fiscal year.
- Interest Coverage Ratio
- The interest coverage ratio exhibited an aggressive upward trend, rising from 49.13 in 2018 to a peak of 272.07 in 2022. Although the ratio moderated to 194.52 in 2023, it remains vastly superior to the baseline figures recorded at the start of the period. These levels indicate a negligible risk of insolvency and an extremely high margin of safety regarding the company's ability to meet its interest payments.
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Fixed Charge Coverage
Deckers Outdoor Corp., fixed charge coverage calculation, comparison to benchmarks
| Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net income | 516,822) | 451,949) | 382,575) | 276,142) | 264,308) | 114,394) | |
| Add: Income tax expense | 149,260) | 112,689) | 118,939) | 64,724) | 64,626) | 106,302) | |
| Add: Interest expense | 3,442) | 2,083) | 6,028) | 5,046) | 4,661) | 4,585) | |
| Earnings before interest and tax (EBIT) | 669,524) | 566,721) | 507,542) | 345,912) | 333,595) | 225,281) | |
| Add: Rent expense for operating leases | 52,961) | 51,126) | 52,849) | 57,966) | 74,085) | 75,455) | |
| Earnings before fixed charges and tax | 722,485) | 617,847) | 560,391) | 403,878) | 407,680) | 300,736) | |
| Interest expense | 3,442) | 2,083) | 6,028) | 5,046) | 4,661) | 4,585) | |
| Rent expense for operating leases | 52,961) | 51,126) | 52,849) | 57,966) | 74,085) | 75,455) | |
| Fixed charges | 56,403) | 53,209) | 58,877) | 63,012) | 78,746) | 80,040) | |
| Solvency Ratio | |||||||
| Fixed charge coverage1 | 12.81 | 11.61 | 9.52 | 6.41 | 5.18 | 3.76 | |
| Benchmarks | |||||||
| Fixed Charge Coverage, Competitors2 | |||||||
| lululemon athletica inc. | 6.42 | 7.19 | 5.23 | — | — | — | |
| Nike Inc. | 8.08 | 8.46 | 8.53 | — | — | — | |
| Fixed Charge Coverage, Sector | |||||||
| Consumer Durables & Apparel | 7.72 | 8.21 | 7.94 | — | — | — | |
| Fixed Charge Coverage, Industry | |||||||
| Consumer Discretionary | 4.95 | 3.65 | 5.60 | — | — | — | |
Based on: 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31).
1 2023 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 722,485 ÷ 56,403 = 12.81
2 Click competitor name to see calculations.
The solvency profile of the organization demonstrates a consistent and significant strengthening of its ability to meet fixed obligations over the period from 2018 to 2023. The overall trend is characterized by a substantial increase in earnings coupled with a general reduction in fixed costs, leading to a marked improvement in the safety margin for debt and fixed charge servicing.
- Earnings Before Fixed Charges and Tax
- A strong upward trajectory is observed in earnings, which grew from US$ 300.7 million in 2018 to US$ 722.5 million in 2023. Despite a marginal stagnation between 2019 and 2020, growth accelerated thereafter, representing a total increase of approximately 140% over the analyzed six-year period.
- Fixed Charges
- Fixed charges exhibited a general downward trend, decreasing from US$ 80.0 million in 2018 to a low of US$ 53.2 million in 2022. Although a slight increase to US$ 56.4 million occurred in 2023, the total obligations remain significantly lower than the initial 2018 levels.
- Fixed Charge Coverage Ratio
- The fixed charge coverage ratio improved monotonically each year, rising from 3.76 in 2018 to 12.81 in 2023. This progression indicates that by the final reporting period, earnings were more than twelve times the amount required to cover fixed charges, reflecting a highly robust solvency position and a substantial reduction in financial risk.
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