APA Corporation (APA)

Interest coverage

		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	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	3,599,000	3,786,000	4,076,000	5,054,000	5,620,000	5,268,000	4,764,000	3,771,000	2,888,000	2,275,000	1,659,000	796,000	-4,102,000	-7,180,000	-7,204,000	-6,887,000	-2,174,000	515,000	1,031,000	1,642,000
Interest expense (ttm)	US$ in thousands	291,000	294,000	297,000	297,000	312,000	333,000	361,000	397,000	419,000	261,000	269,000	264,000	255,000	378,000	363,000	431,000	425,000	414,000	511,000	432,000
Interest coverage		12.37	12.88	13.72	17.02	18.01	15.82	13.20	9.50	6.89	8.72	6.17	3.02	-16.09	-18.99	-19.85	-15.98	-5.12	1.24	2.02	3.80

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $3,599,000K ÷ $291,000K
= 12.37

Interest coverage is a crucial financial ratio that indicates APA Corporation's ability to meet its interest expenses with its operating income. A higher interest coverage ratio implies a lower risk of default on its debt obligations.

Based on the data provided, APA Corporation's interest coverage has been relatively strong and consistent over the past eight quarters. The interest coverage ratio ranged from 9.40 to 15.89 during this period. This indicates that the company's operating income has consistently been sufficient to cover its interest expenses.

The highest interest coverage ratio was observed in Q1 2023 at 14.96, followed by Q2 2023 at 12.11. These peak ratios suggest a robust ability to cover interest payments during those periods. However, the interest coverage ratio slightly declined in the most recent quarter, Q4 2023, to 11.32, though it remained at a healthy level.

Overall, the trend in APA Corporation's interest coverage shows a stable financial position with consistent ability to service its interest obligations. This indicates sound financial management and a lower risk of default on debt payments, providing a favorable outlook for the company's creditors and investors.