Crescent Energy Co (CRGY)

Interest coverage

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021
Earnings before interest and tax (EBIT)	US$ in thousands	236,644	228,902	31,058
Interest expense	US$ in thousands	145,807	95,937	50,740
Interest coverage		1.62	2.39	0.61

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $236,644K ÷ $145,807K
= 1.62

Interest coverage ratio is a financial metric that indicates a company's ability to pay its interest expenses on outstanding debt. A higher interest coverage ratio suggests that the company is more capable of meeting its interest obligations.

In the case of Crescent Energy Co, the interest coverage ratio has fluctuated over the past three years. In 2021, the interest coverage ratio was relatively low at 0.61, indicating that the company's earnings before interest and taxes (EBIT) only covered its interest expenses by 0.61 times. This could imply a higher risk of default on its debt obligations.

However, in 2022, the interest coverage ratio improved to 2.39, signaling a stronger ability to cover interest expenses with EBIT. This improvement reflects a more favorable financial position for Crescent Energy Co compared to the previous year.

By the end of 2023, the interest coverage ratio decreased to 1.62, although it remained above 1. This indicates that Crescent Energy Co's EBIT was sufficient to cover its interest expenses by 1.62 times. While the ratio has decreased from the previous year, it still suggests a relatively moderate level of interest repayment capacity.

Overall, Crescent Energy Co's interest coverage ratio has shown variability over the analyzed period. Investors and creditors may want to monitor this ratio closely to assess the company's ability to manage its debt obligations and financial risk.