Magnolia Oil & Gas Corp (MGY)

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	511,988	534,485	1,073,790	602,594	-1,925,670
Interest expense	US$ in thousands	4,459	4,256	5,854	4,290	3,628
Interest coverage		114.82	125.58	183.43	140.46	-530.78

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $511,988K ÷ $4,459K
= 114.82

Interest coverage is a crucial financial ratio that indicates a company's ability to meet its interest obligations on outstanding debt. In the case of Magnolia Oil & Gas Corp, the interest coverage ratio has shown significant fluctuations over the years.

As of December 31, 2020, the interest coverage ratio was reported at a concerning -530.78. This indicates that the company's operating income was significantly insufficient to cover its interest expenses during that period, raising potential solvency risks.

However, there has been a positive turnaround in the subsequent years. By December 31, 2021, the interest coverage ratio improved to 140.46, indicating a substantial increase in the company's ability to cover its interest obligations. This improvement continued into 2022 and 2023, with interest coverage ratios of 183.43 and 125.58, respectively.

Although there was a slight decline as of December 31, 2024, with an interest coverage ratio of 114.82, the overall trend shows a positive trajectory in Magnolia Oil & Gas Corp's ability to service its interest expenses efficiently.

Overall, the company's interest coverage ratios reflect a mix of challenges and improvements, highlighting the importance of monitoring financial health and debt management strategies.