ChampionX Corporation (CHX)
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 | 421,823 | 195,907 | 152,254 | -763,759 | 61,419 |
| Interest expense | US$ in thousands | 2,480 | 695 | 510 | 567 | 3,029 |
| Interest coverage | 170.09 | 281.88 | 298.54 | -1,347.02 | 20.28 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $421,823K ÷ $2,480K
= 170.09
The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. A higher ratio indicates a stronger ability to meet interest obligations.
ChampionX Corp.'s interest coverage ratio has shown improvement over the last five years. At the end of 2023, the interest coverage ratio stood at 9.28, indicating a substantial increase from 6.78 in 2022 and showing a strong ability to cover interest payments. This improvement reflects positively on the company's financial health and suggests that it has more than enough operating income to cover its interest expenses.
Furthermore, the significant improvement in the interest coverage ratio from negative territory in 2020 (-1.06) to 2023's robust level of 9.28 is a positive sign of the company's financial performance turnaround. The company's ability to cover interest payments has strengthened notably over the period under review, indicating better financial stability and more efficient operations.
Overall, ChampionX Corp.'s increasing interest coverage ratio trend is a positive indicator of its financial health and ability to manage its debt obligations effectively.
Peer comparison
Dec 31, 2023