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
e.l.f. Beauty, Inc., solvency ratios
Based on: 10-K (reporting date: 2024-03-31), 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).
The company's solvency profile exhibits a distinct U-shaped trajectory between 2020 and 2024, characterized by a sustained period of deleveraging followed by a recent increase in debt obligations. While the reliance on debt relative to equity and assets was substantially reduced through 2023, the 2024 fiscal year indicates a reversal of this trend, suggesting a shift in the capital structure.
- Debt-to-Equity and Capital Ratios
- A consistent decline in leverage is observed from 2020 to 2023, with the debt-to-equity ratio falling from 0.57 to a minimum of 0.16. Similarly, the debt-to-capital ratio decreased from 0.36 to 0.14 during this timeframe. This trend reversed in 2024, as the debt-to-equity ratio rose to 0.41 and the debt-to-capital ratio increased to 0.29. The inclusion of operating lease liabilities consistently elevates these ratios but maintains the same directional patterns.
- Asset Utilization and Financial Leverage
- Debt to assets decreased from 0.31 in 2020 to a low of 0.11 in 2023, before increasing to 0.23 in 2024. Financial leverage followed a mirrored path, improving from 1.87 in 2020 to 1.45 in 2023, followed by an increase to 1.76 in 2024. This suggests a more aggressive use of debt to finance assets in the most recent period compared to the preceding three years.
- Debt Coverage and Serviceability
- Coverage ratios experienced a significant contraction in 2021, with interest coverage dropping to 1.90 and fixed charge coverage to 1.42. Following this dip, a robust recovery in debt serviceability occurred. Interest coverage improved dramatically, peaking at 17.06 in 2023 and remaining strong at 12.91 in 2024. Fixed charge coverage similarly expanded from its 2021 low to reach 8.35 by 2024, indicating a substantially enhanced capacity to meet fixed financial obligations despite the recent increase in total debt.
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Debt to Equity
e.l.f. Beauty, Inc., debt to equity calculation, comparison to benchmarks
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current portion of long-term debt and finance lease obligations | 100,307) | 5,575) | 5,786) | 16,281) | 12,568) | |
| Long-term debt and finance lease obligations | 161,819) | 60,881) | 91,080) | 110,255) | 126,088) | |
| Total debt | 262,126) | 66,456) | 96,866) | 126,536) | 138,656) | |
| Stockholders’ equity | 642,572) | 411,017) | 312,429) | 269,646) | 242,171) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 0.41 | 0.16 | 0.31 | 0.47 | 0.57 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Procter & Gamble Co. | 0.65 | 0.74 | 0.68 | 0.69 | — | |
| Debt to Equity, Industry | ||||||
| Consumer Staples | 1.11 | 1.16 | 1.08 | 1.07 | — | |
Based on: 10-K (reporting date: 2024-03-31), 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).
1 2024 Calculation
Debt to equity = Total debt ÷ Stockholders’ equity
= 262,126 ÷ 642,572 = 0.41
2 Click competitor name to see calculations.
An analysis of the solvency position from March 31, 2020, to March 31, 2024, reveals a period of consistent deleveraging followed by a significant increase in borrowed capital in the final fiscal year.
- Total Debt Trends
- Total debt exhibited a steady decline for four consecutive years, falling from 138,656 thousand US dollars in 2020 to a minimum of 66,456 thousand US dollars in 2023. This trend reversed sharply in 2024, with total debt rising to 262,126 thousand US dollars, representing the highest level of indebtedness within the observed period.
- Stockholders' Equity Growth
- Stockholders' equity demonstrated uninterrupted growth throughout the five-year duration. The equity base expanded from 242,171 thousand US dollars in 2020 to 642,572 thousand US dollars in 2024, indicating a substantial and consistent increase in the company's net asset value.
- Debt to Equity Ratio Interpretation
- The debt to equity ratio decreased progressively from 0.57 in 2020 to a low of 0.16 in 2023, signaling a period of reduced financial leverage and improved solvency. Although the ratio increased to 0.41 in 2024 corresponding with the rise in total debt, the ratio remains lower than the 2020 starting point. This suggests that the growth in stockholders' equity has acted as a buffer, mitigating the impact of the increased debt on the overall solvency profile.
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Debt to Equity (including Operating Lease Liability)
e.l.f. Beauty, Inc., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current portion of long-term debt and finance lease obligations | 100,307) | 5,575) | 5,786) | 16,281) | 12,568) | |
| Long-term debt and finance lease obligations | 161,819) | 60,881) | 91,080) | 110,255) | 126,088) | |
| Total debt | 262,126) | 66,456) | 96,866) | 126,536) | 138,656) | |
| Current portion of operating lease liabilities | 7,016) | 4,510) | 4,391) | 4,292) | 3,083) | |
| Long-term operating lease obligations | 21,459) | 11,201) | 15,744) | 20,084) | 11,239) | |
| Total debt (including operating lease liability) | 290,601) | 82,167) | 117,001) | 150,912) | 152,978) | |
| Stockholders’ equity | 642,572) | 411,017) | 312,429) | 269,646) | 242,171) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 0.45 | 0.20 | 0.37 | 0.56 | 0.63 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Procter & Gamble Co. | 0.66 | 0.76 | 0.69 | 0.71 | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Consumer Staples | 1.23 | 1.28 | 1.20 | 1.19 | — | |
Based on: 10-K (reporting date: 2024-03-31), 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).
1 2024 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Stockholders’ equity
= 290,601 ÷ 642,572 = 0.45
2 Click competitor name to see calculations.
The solvency profile of the organization is characterized by a period of consistent deleveraging from 2020 through 2023, followed by a significant increase in liabilities in the most recent fiscal year. Throughout the entire five-year period, stockholders' equity has expanded steadily, ensuring that the company maintains a capital structure where equity consistently exceeds total debt.
- Total Debt Trends
- Total debt, including operating lease liabilities, experienced a downward trajectory for four consecutive years, decreasing from US$ 152.98 million in 2020 to a period low of US$ 82.17 million in 2023. This trend reversed sharply in 2024, with total debt increasing to US$ 290.60 million, marking a substantial expansion of the company's total obligations.
- Stockholders' Equity Growth
- A continuous upward trend in stockholders' equity is observed, with values rising from US$ 242.17 million in 2020 to US$ 642.57 million in 2024. This consistent growth indicates a strengthening of the company's net asset base and provides significant cushioning against the increase in debt observed in the final year.
- Debt to Equity Ratio Analysis
- The debt to equity ratio declined from 0.63 in 2020 to 0.20 in 2023, reflecting a period of reduced financial leverage and improved solvency. Although the ratio rose to 0.45 in 2024 due to the sharp increase in total debt, the simultaneous growth in equity prevented the ratio from returning to the higher levels seen at the beginning of the period. The current ratio suggests a balanced approach to leverage, remaining well below the 1.0 threshold.
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Debt to Capital
e.l.f. Beauty, Inc., debt to capital calculation, comparison to benchmarks
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current portion of long-term debt and finance lease obligations | 100,307) | 5,575) | 5,786) | 16,281) | 12,568) | |
| Long-term debt and finance lease obligations | 161,819) | 60,881) | 91,080) | 110,255) | 126,088) | |
| Total debt | 262,126) | 66,456) | 96,866) | 126,536) | 138,656) | |
| Stockholders’ equity | 642,572) | 411,017) | 312,429) | 269,646) | 242,171) | |
| Total capital | 904,698) | 477,473) | 409,295) | 396,182) | 380,827) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.29 | 0.14 | 0.24 | 0.32 | 0.36 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Procter & Gamble Co. | 0.39 | 0.43 | 0.40 | 0.41 | — | |
| Debt to Capital, Industry | ||||||
| Consumer Staples | 0.53 | 0.54 | 0.52 | 0.52 | — | |
Based on: 10-K (reporting date: 2024-03-31), 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).
1 2024 Calculation
Debt to capital = Total debt ÷ Total capital
= 262,126 ÷ 904,698 = 0.29
2 Click competitor name to see calculations.
Between the fiscal years ending March 31, 2020, and March 31, 2023, a consistent deleveraging trend is observed, followed by a significant expansion of both debt and total capital in 2024. The solvency profile shifted from a steady reduction of liabilities to a substantial increase in financial leverage within the most recent reporting period.
- Total Debt Trajectory
- Total debt exhibited a sustained decline for four consecutive years, falling from 138,656 thousand US dollars in 2020 to a low of 66,456 thousand US dollars in 2023. However, this trend reversed sharply in 2024, with total debt increasing to 262,126 thousand US dollars, representing a nearly fourfold increase over the previous year.
- Total Capital Growth
- Total capital grew steadily from 380,827 thousand US dollars in 2020 to 477,473 thousand US dollars in 2023. A significant acceleration occurred in 2024, where total capital surged to 904,698 thousand US dollars, indicating a major expansion of the company's capital base.
- Debt to Capital Ratio Analysis
- The debt to capital ratio declined progressively from 0.36 in 2020 to a minimum of 0.14 in 2023, reflecting a reduction in the proportion of debt relative to total capital. In 2024, the ratio rose to 0.29. Despite this recent increase, the ratio remains below the 2020 level, suggesting that the increase in total capital partially offset the impact of the increased debt load.
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Debt to Capital (including Operating Lease Liability)
e.l.f. Beauty, Inc., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current portion of long-term debt and finance lease obligations | 100,307) | 5,575) | 5,786) | 16,281) | 12,568) | |
| Long-term debt and finance lease obligations | 161,819) | 60,881) | 91,080) | 110,255) | 126,088) | |
| Total debt | 262,126) | 66,456) | 96,866) | 126,536) | 138,656) | |
| Current portion of operating lease liabilities | 7,016) | 4,510) | 4,391) | 4,292) | 3,083) | |
| Long-term operating lease obligations | 21,459) | 11,201) | 15,744) | 20,084) | 11,239) | |
| Total debt (including operating lease liability) | 290,601) | 82,167) | 117,001) | 150,912) | 152,978) | |
| Stockholders’ equity | 642,572) | 411,017) | 312,429) | 269,646) | 242,171) | |
| Total capital (including operating lease liability) | 933,173) | 493,184) | 429,430) | 420,558) | 395,149) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.31 | 0.17 | 0.27 | 0.36 | 0.39 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Procter & Gamble Co. | 0.40 | 0.43 | 0.41 | 0.41 | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Consumer Staples | 0.55 | 0.56 | 0.54 | 0.54 | — | |
Based on: 10-K (reporting date: 2024-03-31), 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).
1 2024 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 290,601 ÷ 933,173 = 0.31
2 Click competitor name to see calculations.
The solvency position demonstrated a consistent trend of deleveraging from 2020 through 2023, followed by a marked increase in leverage in 2024. While the total capital base grew steadily throughout the five-year period, debt levels experienced a significant surge in the final reporting year.
- Debt to Capital Ratio Evolution
- The ratio declined steadily from 0.39 in March 2020 to a period low of 0.17 in March 2023, indicating a strengthening solvency profile and a reduced reliance on debt relative to total capital. This trend reversed in March 2024, with the ratio increasing to 0.31.
- Total Debt Dynamics
- Total debt, including operating lease liabilities, followed a downward trajectory for four consecutive years, falling from 152.9 million US dollars in 2020 to 82.2 million US dollars in 2023. In March 2024, a significant increase was observed, with total debt rising to 290.6 million US dollars.
- Capital Base Expansion
- Total capital increased consistently from 395.1 million US dollars in 2020 to 933.2 million US dollars in 2024. The most substantial expansion occurred between March 2023 and March 2024, where the capital base grew by 439.9 million US dollars, nearly doubling in value within a single fiscal year.
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Debt to Assets
e.l.f. Beauty, Inc., debt to assets calculation, comparison to benchmarks
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current portion of long-term debt and finance lease obligations | 100,307) | 5,575) | 5,786) | 16,281) | 12,568) | |
| Long-term debt and finance lease obligations | 161,819) | 60,881) | 91,080) | 110,255) | 126,088) | |
| Total debt | 262,126) | 66,456) | 96,866) | 126,536) | 138,656) | |
| Total assets | 1,129,247) | 595,601) | 494,632) | 487,393) | 453,104) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.23 | 0.11 | 0.20 | 0.26 | 0.31 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Procter & Gamble Co. | 0.27 | 0.29 | 0.27 | 0.27 | — | |
| Debt to Assets, Industry | ||||||
| Consumer Staples | 0.31 | 0.31 | 0.30 | 0.30 | — | |
Based on: 10-K (reporting date: 2024-03-31), 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).
1 2024 Calculation
Debt to assets = Total debt ÷ Total assets
= 262,126 ÷ 1,129,247 = 0.23
2 Click competitor name to see calculations.
The solvency profile of the organization exhibits a period of significant deleveraging followed by a strategic expansion of both debt and assets in the most recent fiscal year. From 2020 to 2023, a consistent improvement in the debt-to-assets ratio is observed, reaching a low of 0.11 before shifting in 2024.
- Total Asset Growth
- A continuous upward trajectory in total assets is evident over the five-year period. Assets increased steadily from US$ 453.1 million in 2020 to US$ 595.6 million in 2023, followed by a substantial acceleration in 2024, where assets nearly doubled to reach US$ 1,129.2 million.
- Total Debt Dynamics
- Total debt experienced a sustained decline between 2020 and 2023, falling from US$ 138.7 million to US$ 66.5 million. However, this trend reversed sharply in 2024, with total debt increasing to US$ 262.1 million, representing a significant increase in leverage compared to the previous year.
- Debt to Assets Ratio Analysis
- The debt-to-assets ratio declined progressively from 0.31 in 2020 to 0.11 in 2023, indicating a period of strengthening solvency and reduced reliance on borrowed capital. In 2024, the ratio rose to 0.23. Despite the sharp increase in nominal debt during 2024, the ratio remains lower than the 2020 level due to the concurrent and more aggressive expansion of the total asset base.
The overall financial position indicates a transition from a phase of debt reduction to a phase of aggressive scaling. The expansion of assets in 2024 provided a cushion that mitigated the impact of the increased debt load on the overall solvency ratio.
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Debt to Assets (including Operating Lease Liability)
e.l.f. Beauty, Inc., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current portion of long-term debt and finance lease obligations | 100,307) | 5,575) | 5,786) | 16,281) | 12,568) | |
| Long-term debt and finance lease obligations | 161,819) | 60,881) | 91,080) | 110,255) | 126,088) | |
| Total debt | 262,126) | 66,456) | 96,866) | 126,536) | 138,656) | |
| Current portion of operating lease liabilities | 7,016) | 4,510) | 4,391) | 4,292) | 3,083) | |
| Long-term operating lease obligations | 21,459) | 11,201) | 15,744) | 20,084) | 11,239) | |
| Total debt (including operating lease liability) | 290,601) | 82,167) | 117,001) | 150,912) | 152,978) | |
| Total assets | 1,129,247) | 595,601) | 494,632) | 487,393) | 453,104) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.26 | 0.14 | 0.24 | 0.31 | 0.34 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Procter & Gamble Co. | 0.27 | 0.29 | 0.28 | 0.28 | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Consumer Staples | 0.34 | 0.34 | 0.33 | 0.33 | — | |
Based on: 10-K (reporting date: 2024-03-31), 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).
1 2024 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 290,601 ÷ 1,129,247 = 0.26
2 Click competitor name to see calculations.
The solvency profile of the entity over the five-year period ending March 31, 2024, is characterized by an initial phase of deleveraging followed by a significant expansion in both debt and assets in the final year.
- Debt to Assets Ratio Trend (2020–2023)
- A consistent decline in the debt to assets ratio is observed between March 31, 2020, and March 31, 2023, falling from 0.34 to 0.14. This improvement was driven by a simultaneous reduction in total debt, which decreased from 152,978 thousand US$ to 82,167 thousand US$, and a steady increase in total assets from 453,104 thousand US$ to 595,601 thousand US$.
- Fiscal Year 2024 Analysis
- A reversal in the downward trend occurred on March 31, 2024, as the ratio increased to 0.26. This shift is attributed to a substantial increase in total debt, which rose to 290,601 thousand US$, representing more than a threefold increase from the previous year. However, the ratio was moderated by a significant expansion of the asset base, which grew to 1,129,247 thousand US$.
- Asset Base Expansion
- Total assets demonstrated continuous growth throughout the entire period, increasing from 453,104 thousand US$ in 2020 to 1,129,247 thousand US$ in 2024. The most aggressive growth occurred in the final year, where assets nearly doubled, suggesting a significant scaling of operations or capital investment.
- Overall Solvency Position
- Despite the spike in debt in 2024, the debt to assets ratio of 0.26 remains lower than the levels recorded in 2020 (0.34) and 2021 (0.31), indicating that the growth in assets has partially offset the increase in liabilities.
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Financial Leverage
e.l.f. Beauty, Inc., financial leverage calculation, comparison to benchmarks
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Total assets | 1,129,247) | 595,601) | 494,632) | 487,393) | 453,104) | |
| Stockholders’ equity | 642,572) | 411,017) | 312,429) | 269,646) | 242,171) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 1.76 | 1.45 | 1.58 | 1.81 | 1.87 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Procter & Gamble Co. | 2.43 | 2.58 | 2.52 | 2.57 | — | |
| Financial Leverage, Industry | ||||||
| Consumer Staples | 3.62 | 3.71 | 3.59 | 3.59 | — | |
Based on: 10-K (reporting date: 2024-03-31), 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).
1 2024 Calculation
Financial leverage = Total assets ÷ Stockholders’ equity
= 1,129,247 ÷ 642,572 = 1.76
2 Click competitor name to see calculations.
An analysis of the capital structure from March 31, 2020, to March 31, 2024, reveals a period of substantial asset expansion and a fluctuating leverage profile. Total assets grew from US$ 453.1 million in 2020 to US$ 1.13 billion in 2024, with the most significant acceleration occurring between 2023 and 2024, where assets increased by approximately 89.6%.
- Asset and Equity Growth
- Stockholders' equity demonstrated consistent growth over the five-year period, increasing from US$ 242.2 million in 2020 to US$ 642.6 million in 2024. This steady upward trajectory indicates a continuous accumulation of retained earnings or capital contributions, supporting the company's expanding balance sheet.
- Financial Leverage Trends
- The financial leverage ratio experienced a downward trend for the first four years of the analyzed period, declining from 1.87 in 2020 to a low of 1.45 in 2023. This reduction suggests a strategic shift toward a more equity-heavy capital structure and a decrease in reliance on external debt to fund assets during this interval.
- Recent Capital Structure Shift
- A reversal in the leverage trend is observed in 2024, with the ratio rising to 1.76. This increase indicates that the rapid expansion of total assets in the most recent fiscal year outpaced the growth in stockholders' equity. While the leverage remains lower than the 2020 level, the recent uptick suggests a renewed use of liabilities to finance the significant growth in the asset base.
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Interest Coverage
e.l.f. Beauty, Inc., interest coverage calculation, comparison to benchmarks
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 127,663) | 61,530) | 21,770) | 6,232) | 17,884) | |
| Add: Income tax expense | 13,327) | 2,544) | 3,661) | (2,542) | 6,185) | |
| Add: Interest expense | 11,840) | 3,990) | 2,444) | 4,095) | 7,170) | |
| Earnings before interest and tax (EBIT) | 152,830) | 68,064) | 27,875) | 7,785) | 31,239) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 12.91 | 17.06 | 11.41 | 1.90 | 4.36 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Procter & Gamble Co. | 21.28 | 25.28 | 41.99 | 36.09 | — | |
| Interest Coverage, Industry | ||||||
| Consumer Staples | 10.92 | 11.37 | 15.69 | 11.46 | — | |
Based on: 10-K (reporting date: 2024-03-31), 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).
1 2024 Calculation
Interest coverage = EBIT ÷ Interest expense
= 152,830 ÷ 11,840 = 12.91
2 Click competitor name to see calculations.
The solvency profile exhibits a period of significant volatility followed by a phase of rapid operational expansion. The capacity to service interest obligations reached a critical low in 2021 before experiencing a substantial recovery and stabilization at higher levels through 2024.
- Earnings Before Interest and Tax (EBIT) Trends
- A sharp contraction in operational earnings occurred between 2020 and 2021, with EBIT falling from 31,239 thousand to 7,785 thousand. However, this was followed by a trajectory of aggressive growth. Earnings recovered in 2022 and accelerated through 2023 and 2024, culminating in a peak of 152,830 thousand. This represents a nearly 20-fold increase in EBIT from the 2021 trough to the 2024 period.
- Interest Expense Patterns
- Interest costs initially trended downward, reaching a minimum of 2,444 thousand in 2022. A reversal in this trend is observed starting in 2023, with a significant spike occurring in 2024, where expenses rose to 11,840 thousand. This sharp increase in 2024 indicates a substantial rise in the cost of debt or an increase in total borrowings.
- Interest Coverage Ratio Analysis
- The interest coverage ratio fluctuated significantly, dropping to a low of 1.90 in 2021, which indicated a tightened margin of safety for debt servicing. The ratio improved dramatically in 2022 and 2023, peaking at 17.06, driven by the rapid growth in EBIT relative to stable interest costs. In 2024, the ratio declined to 12.91; while this remains a strong indicator of solvency, the decline is directly attributable to the disproportionate increase in interest expenses compared to the growth in operating income.
In summary, while the increase in interest expenses in 2024 has slightly moderated the interest coverage ratio, the overall trend remains positive. The substantial growth in EBIT has provided a robust buffer, ensuring that the company maintains a strong ability to meet its interest obligations despite rising finance costs.
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Fixed Charge Coverage
e.l.f. Beauty, Inc., fixed charge coverage calculation, comparison to benchmarks
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 127,663) | 61,530) | 21,770) | 6,232) | 17,884) | |
| Add: Income tax expense | 13,327) | 2,544) | 3,661) | (2,542) | 6,185) | |
| Add: Interest expense | 11,840) | 3,990) | 2,444) | 4,095) | 7,170) | |
| Earnings before interest and tax (EBIT) | 152,830) | 68,064) | 27,875) | 7,785) | 31,239) | |
| Add: Operating lease cost | 7,341) | 4,638) | 4,686) | 4,756) | 2,950) | |
| Earnings before fixed charges and tax | 160,171) | 72,702) | 32,561) | 12,541) | 34,189) | |
| Interest expense | 11,840) | 3,990) | 2,444) | 4,095) | 7,170) | |
| Operating lease cost | 7,341) | 4,638) | 4,686) | 4,756) | 2,950) | |
| Fixed charges | 19,181) | 8,628) | 7,130) | 8,851) | 10,120) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 8.35 | 8.43 | 4.57 | 1.42 | 3.38 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Procter & Gamble Co. | 12.98 | 14.41 | 18.38 | 16.85 | — | |
| Fixed Charge Coverage, Industry | ||||||
| Consumer Staples | 7.38 | 7.41 | 9.12 | 7.50 | — | |
Based on: 10-K (reporting date: 2024-03-31), 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).
1 2024 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 160,171 ÷ 19,181 = 8.35
2 Click competitor name to see calculations.
An analysis of solvency indicators reveals a significant strengthening in the capacity to meet fixed obligations over the five-year period. While a period of volatility was observed in 2021, the overall trajectory demonstrates robust growth in earnings relative to fixed charges, indicating a reduced risk profile and improved financial stability.
- Earnings before Fixed Charges and Tax
- Earnings experienced a sharp contraction in 2021, falling to 12,541 thousand US dollars. Following this trough, a period of rapid expansion occurred, with earnings increasing consistently to 160,171 thousand US dollars by March 31, 2024. This represents a substantial increase in operational profitability available for debt service.
- Fixed Charge Obligations
- Fixed charges remained relatively stable and showed a slight downward trend between 2020 and 2022, reaching a low of 7,130 thousand US dollars. A significant escalation is observed in 2024, where charges rose to 19,181 thousand US dollars, suggesting an increase in lease obligations or interest expenses during the final year of the period.
- Fixed Charge Coverage Ratio
- The coverage ratio declined to a minimum of 1.42 in 2021, reflecting a narrowed margin of safety. However, the ratio recovered sharply to 4.57 in 2022 and peaked at 8.43 in 2023. Despite the increase in fixed charges in 2024, the ratio remained strong at 8.35, as the growth in earnings significantly outpaced the growth in obligations.
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