ConocoPhillips (COP)
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 | 17,212,000 | 29,137,000 | 13,682,000 | -2,273,000 | 10,307,000 |
| Interest expense | US$ in thousands | 924,000 | 909,000 | 970,000 | 913,000 | 851,000 |
| Interest coverage | 18.63 | 32.05 | 14.11 | -2.49 | 12.11 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $17,212,000K ÷ $924,000K
= 18.63
Conoco Phillips' interest coverage ratio has shown significant improvement over the past five years. The ratio stood at 9.66 in 2019, which increased to -2.01 in 2020, indicating a period of financial distress where the company's earnings were insufficient to cover its interest expenses. However, the company managed to turn this around, with a sharp increase in the ratio to 14.32 in 2021, demonstrating a significant improvement in its ability to cover interest payments. This positive trend continued with a further increase to 33.90 in 2022 and a substantial rise to 44.74 in 2023.
The notable improvement in Conoco Phillips' interest coverage ratio implies that the company's earnings are now more than sufficient to cover its interest expenses. This trend indicates a stronger financial position and reduced financial risk for the company, as higher interest coverage ratios are generally seen as favorable by investors and creditors. Overall, the upward trajectory of Conoco Phillips' interest coverage ratio reflects improved financial performance and stability over the past years.
Peer comparison
Dec 31, 2023