Diamondback Energy Inc (FANG)
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 | 4,230,000 | 5,719,000 | 3,012,000 | -5,424,000 | 459,000 |
| Interest expense | US$ in thousands | 175,000 | 159,000 | 199,000 | 197,000 | 172,000 |
| Interest coverage | 24.17 | 35.97 | 15.14 | -27.53 | 2.67 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $4,230,000K ÷ $175,000K
= 24.17
Based on the data provided, Diamondback Energy Inc's interest coverage ratio has fluctuated over the past five years. The interest coverage ratio calculates the company's ability to meet its interest payments on outstanding debt.
In 2023, the interest coverage ratio was 26.76, indicating that the company's operating income was 26.76 times its interest expenses for the year. This is a strong improvement from the previous year's ratio of 44.89, suggesting that the company had a robust ability to cover its interest payments.
Comparing this to 2021, the interest coverage ratio was 21.78, demonstrating a slight decrease in the company's ability to cover interest expenses compared to 2022. However, the ratio is still considered healthy.
In 2020, Diamondback Energy Inc's interest coverage ratio was 2.72, indicating a significant decline compared to the previous years. This could raise concerns about the company's ability to service its debt obligations with its operating income alone.
Lastly, in 2019, the interest coverage ratio was 8.63, showing a recovery from the 2020 low but still lower than the more recent years.
Overall, the trend in Diamondback Energy Inc's interest coverage ratio shows fluctuations, with significant improvements in more recent years. It is vital to monitor this ratio to ensure the company's ability to manage its debt and interest payments effectively.
Peer comparison
Dec 31, 2023