Liberty Oilfield Services Inc (LBRT)
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 | 760,579 | 495,890 | -181,224 | -131,935 | 67,736 |
| Interest expense | US$ in thousands | 6,060 | 1,707 | 3,635 | 14,505 | 14,681 |
| Interest coverage | 125.51 | 290.50 | -49.86 | -9.10 | 4.61 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $760,579K ÷ $6,060K
= 125.51
Interest coverage measures a company's ability to cover its interest expenses with its operating income.
Liberty Energy Inc's interest coverage has shown significant improvement over the past five years. In 2023, the interest coverage ratio stands at a healthy 27.40, indicating the company's strong capability to cover its interest payments with operating income. This is an improvement from the previous year's ratio of 21.63.
In contrast, the company faced challenges in 2021 and 2020 with negative interest coverage ratios of -11.56 and -12.23, respectively. This suggests that in those years, Liberty Energy Inc's operating income was not sufficient to cover its interest expenses, potentially indicating financial distress.
The positive trend in interest coverage from 2020 to 2023 reflects an improvement in the company's financial health and ability to service its debt obligations. However, it is essential for the company to maintain and further strengthen its interest coverage ratio to ensure financial stability and sustainability in the long term.
Peer comparison
Dec 31, 2023