California Resources Corp (CRC)
Interest coverage
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 620,000 | 808,000 | 812,000 | 293,000 | 429,000 |
| Interest expense | US$ in thousands | 87,000 | 56,000 | 53,000 | 54,000 | 383,000 |
| Interest coverage | 7.13 | 14.43 | 15.32 | 5.43 | 1.12 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $620,000K ÷ $87,000K
= 7.13
The interest coverage ratio of California Resources Corp has shown a significant improvement over the past few years. As of December 31, 2019, the company's interest coverage was relatively low at 1.12, indicating that its ability to cover interest expenses with earnings before interest and taxes was weak.
However, by December 31, 2021, the interest coverage ratio had increased substantially to 5.43, showing a healthier position compared to the previous year. This improvement continued into the following years, with ratios of 15.32, 14.43, and 7.13 as of December 31, 2022, 2023, and 2024, respectively.
The trend in the interest coverage ratio suggests that California Resources Corp has strengthened its capacity to meet its interest obligations with operating income. The significant increase in the ratio indicates better financial health and a reduced risk of default due to insufficient earnings to cover interest expenses. Overall, the company's improving interest coverage ratio reflects a positive financial performance and a more sustainable debt servicing capability.
Peer comparison
Dec 31, 2024