Baker Hughes Co (BKR)
Interest coverage
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 2,317,000 | 1,185,000 | 1,310,000 | -15,978,000 | 1,074,000 |
| Interest expense | US$ in thousands | 216,000 | 252,000 | 299,000 | 264,000 | 237,000 |
| Interest coverage | 10.73 | 4.70 | 4.38 | -60.52 | 4.53 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $2,317,000K ÷ $216,000K
= 10.73
The interest coverage ratio measures a company's ability to pay interest on its outstanding debt obligations using its operating income. A higher interest coverage ratio indicates that the company is more capable of meeting its interest payments.
From the data provided for Baker Hughes Co, we observe the following trend in interest coverage ratio over the past five years:
- Dec 31, 2023: 12.22
- Dec 31, 2022: 7.50
- Dec 31, 2021: 5.28
- Dec 31, 2020: 3.01
- Dec 31, 2019: 6.75
The interest coverage ratio has shown a general increasing trend from 2019 to 2023, indicating improvement in Baker Hughes Co's ability to cover its interest expenses with operating income. This suggests a stronger financial position and lower risk of default on debt obligations. The significant increase in the interest coverage ratio from 2020 to 2023 is particularly notable, demonstrating the company's enhanced profitability and ability to service its debt more comfortably.
Overall, the trend of increasing interest coverage ratios reflects positively on Baker Hughes Co's financial stability and ability to manage its debt obligations effectively over the years.
Peer comparison
Dec 31, 2023