Chesapeake Energy Corp (CHK)
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 | 3,221,000 | 4,694,000 | 5,609,000 | 6,419,000 | 3,811,000 | 3,002,000 | 1,655,000 | -116,000 | 969,000 | -850,000 | -1,232,000 | -950,000 | -9,422,000 | -9,226,000 | -8,391,000 | -7,979,000 | 12,000 | 967,000 | 872,000 | 496,000 |
| Interest expense (ttm) | US$ in thousands | 104,000 | 122,000 | 151,000 | 165,000 | 160,000 | 146,000 | 111,000 | 93,000 | 73,000 | 71,000 | 79,000 | 198,000 | 331,000 | 445,000 | 597,000 | 635,000 | 651,000 | 664,000 | 652,000 | 632,000 |
| Interest coverage | 30.97 | 38.48 | 37.15 | 38.90 | 23.82 | 20.56 | 14.91 | -1.25 | 13.27 | -11.97 | -15.59 | -4.80 | -28.47 | -20.73 | -14.06 | -12.57 | 0.02 | 1.46 | 1.34 | 0.78 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $3,221,000K ÷ $104,000K
= 30.97
The interest coverage ratio is a measure of a company's ability to meet its interest expenses on outstanding debt. A higher ratio indicates that the company is more capable of servicing its debt obligations.
Analyzing Chesapeake Energy Corp's interest coverage ratio over the provided periods, we observe significant fluctuations. In the most recent period, as of December 31, 2023, the interest coverage ratio stands at a robust 30.97, indicating a strong ability to cover interest payments with operating income.
Looking back, we notice a steady improvement in the interest coverage ratio from the negative figures in 2022 to the positive figures in 2023. This suggests that the company has been able to enhance its operational performance and profitability to better handle interest expenses.
It is essential to highlight that negative interest coverage ratios, seen in some periods, indicate that the company's operating income was insufficient to cover its interest expenses during those specific quarters. This could imply financial strain and the need for careful management of debt levels.
Overall, the recent improvement in Chesapeake Energy Corp's interest coverage ratio reflects a positive trend in its financial health and ability to meet its debt obligations. However, consistent monitoring of this ratio is crucial to ensure the company's long-term financial stability.
Peer comparison
Dec 31, 2023