Now Inc (DNOW)

Interest coverage

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Earnings before interest and tax (EBIT) US$ in thousands 119,000 140,000 151,000 17,000 -105,000
Interest expense US$ in thousands — — 7,000 12,000 624,000
Interest coverage — — 21.57 1.42 -0.17

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $119,000K ÷ $—K
= —

Now Inc's interest coverage ratio has shown significant fluctuations over the years. In December 31, 2020, the interest coverage ratio was at a concerning -0.17, indicating that the company's earnings were insufficient to cover its interest expenses, potentially posing a risk of default.

However, in December 31, 2021, the interest coverage ratio improved to 1.42, suggesting a slight recovery in the company's ability to meet its interest obligations. This improvement could be attributed to potential cost-cutting measures or an increase in earnings.

By December 31, 2022, the interest coverage ratio surged to a healthy 21.57, signaling a substantial improvement in Now Inc's financial position. This significant increase indicates that the company's earnings are significantly more than enough to cover its interest expenses, reflecting a strong ability to meet its debt obligations comfortably.

The absence of data for December 31, 2023 and December 31, 2024 makes it challenging to provide a complete analysis for those periods. However, based on the trajectory shown in previous years, the company may have been able to sustain or further improve its interest coverage ratio.

Overall, the fluctuating trend in Now Inc's interest coverage ratio highlights the company's volatility in its ability to meet its interest payments. It is essential for stakeholders to closely monitor this ratio to assess the company's financial health and debt repayment capabilities.