APA Corporation (APA)
Interest coverage
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 2,084,000 | 2,111,000 | 3,266,000 | 3,020,000 | 3,277,000 | 3,537,000 | 3,869,000 | 4,692,000 | 6,123,000 | 5,991,000 | 4,966,000 | 3,964,000 | 2,337,000 | 1,666,000 | 1,625,000 | 708,000 | -4,486,000 | -7,502,000 | -7,572,000 | -7,396,000 |
| Interest expense (ttm) | US$ in thousands | 376,000 | 363,000 | 345,000 | 327,000 | 331,000 | 329,000 | 322,000 | 316,000 | 322,000 | 338,000 | 363,000 | 395,000 | 418,000 | 434,000 | 445,000 | 441,000 | 434,000 | 422,000 | 410,000 | 404,000 |
| Interest coverage | 5.54 | 5.82 | 9.47 | 9.24 | 9.90 | 10.75 | 12.02 | 14.85 | 19.02 | 17.72 | 13.68 | 10.04 | 5.59 | 3.84 | 3.65 | 1.61 | -10.34 | -17.78 | -18.47 | -18.31 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $2,084,000K ÷ $376,000K
= 5.54
APA Corporation's interest coverage ratio, which measures the company's ability to cover its interest expenses with its operating income, has shown a significant improvement over the reporting periods from March 31, 2020, to December 31, 2024.
At the beginning of the analyzed period, from March 31, 2020, the interest coverage ratio was negative, indicating that the company's operating income was insufficient to cover its interest expenses. The negative trend continued until December 31, 2021, when the ratio was still below 1, reflecting a critical situation where the company struggled to meet its interest obligations.
However, starting from the first quarter of 2022, the interest coverage ratio turned positive, signifying a favorable shift. The ratio continued to improve steadily, reaching its peak at 19.02 on December 31, 2022, showing a strong ability to cover interest payments with operating income.
Despite some fluctuations in the following reporting periods, the interest coverage ratio remained at acceptable levels above 5, indicating that APA Corporation's financial health in terms of meeting interest obligations improved significantly compared to the earlier periods of negative coverage. This positive trend suggests that the company has strengthened its financial position and has a better capacity to handle its debt obligations going forward.
Peer comparison
Dec 31, 2024