Civitas Resources Inc (CIVI)

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	1,182,190	1,685,980	261,479	45,026	157,224
Interest expense	US$ in thousands	182,740	32,199	9,700	2,045	2,650
Interest coverage		6.47	52.36	26.96	22.02	59.33

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $1,182,190K ÷ $182,740K
= 6.47

Interest coverage is a financial ratio that indicates a company's ability to meet its interest obligations on outstanding debt. Civitas Resources Inc's interest coverage has shown fluctuations over the past five years.

In 2023, the interest coverage ratio was 6.70, reflecting the company's ability to cover its interest expenses approximately 6.70 times. This indicates that Civitas Resources Inc had sufficient earnings to cover its interest payments, although at a lower level compared to previous years.

The significant increase in interest coverage from 2022 (62.94) to 2023 (6.70) suggests a sharp decline in earnings relative to interest expenses during that period. This substantial decrease in 2023 may raise concerns about the company's ability to service its debt obligations efficiently.

When looking at the trend over the past five years, Civitas Resources Inc has shown varying levels of interest coverage. While the company had a notably high interest coverage ratio in 2022 (62.94) and 2019 (44.06), indicating a strong ability to meet interest payments, there were lower ratios in 2023 (6.70), 2021 (43.60), and 2020 (16.08), indicating potential challenges in meeting interest obligations during those periods.

Overall, the fluctuating pattern of interest coverage ratio for Civitas Resources Inc suggests variations in its earnings and the company's ability to meet its interest expenses comfortably over the years. It is crucial for investors and stakeholders to closely monitor this ratio to assess the company's financial health and debt repayment capacity.