Helmerich and Payne Inc (HP)
Interest coverage
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 451,899 | 610,662 | 50,522 | -405,916 | -610,129 |
| Interest expense | US$ in thousands | 29,093 | 17,283 | 19,203 | 23,955 | 24,474 |
| Interest coverage | 15.53 | 35.33 | 2.63 | -16.94 | -24.93 |
September 30, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $451,899K ÷ $29,093K
= 15.53
The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. A higher interest coverage ratio indicates a stronger ability to meet interest obligations.
In the case of Helmerich and Payne Inc, the interest coverage ratio has fluctuated significantly over the past five years. As of September 30, 2024, the interest coverage ratio stood at 15.53, reflecting a healthy ability to cover interest expenses. This is a positive sign indicating the company's earnings are sufficient to cover its interest payments.
In contrast, the interest coverage ratios for the previous years show significant variations. In September 2023, the ratio was notably higher at 35.33, suggesting even stronger profitability relative to interest expenses. However, in September 2021 and 2020, the company had negative interest coverage ratios of -16.94 and -24.93, respectively. This indicates that in those years, the company's operating income was insufficient to cover its interest expenses.
Overall, the improvement in the interest coverage ratio from negative levels in the previous years to positive levels in the most recent year is a positive trend for Helmerich and Payne Inc. It suggests an enhanced ability to meet its interest obligations and indicates a potentially stronger financial position.
Peer comparison
Sep 30, 2024