Magnolia Oil & Gas Corp (MGY)

Interest coverage

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	534,487	594,306	757,923	964,849	1,073,786	1,077,893	937,636	738,568	602,594	443,245	293,693	138,567	-1,925,669	-1,945,649	-1,939,921	-1,870,354	118,203	143,849	130,853	188,553
Interest expense (ttm)	US$ in thousands	4,256	4,215	4,175	4,084	5,854	5,953	6,051	6,192	4,290	4,067	3,849	3,642	3,628	3,607	3,586	-2,979	3,541	10,139	14,206	22,479
Interest coverage		125.58	141.00	181.54	236.25	183.43	181.07	154.96	119.28	140.46	108.99	76.30	38.05	-530.78	-539.41	-540.97	—	33.38	14.19	9.21	8.39

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $534,487K ÷ $4,256K
= 125.58

Interest coverage ratio is a financial metric that indicates a company's ability to pay its interest expenses on outstanding debt. A higher interest coverage ratio suggests that the company is more capable of meeting its interest payment obligations.

Analyzing Magnolia Oil & Gas Corp's interest coverage over the past few quarters, we observe fluctuations in the ratio. The interest coverage ratio ranged from a low of -540.97 in June 2020 to a high of 236.25 in March 2023. These significant fluctuations indicate variability in the company's ability to cover its interest expenses over time.

In recent quarters, Magnolia Oil & Gas Corp's interest coverage ratio has shown an improving trend, reaching levels above 100, which are generally considered healthy. This indicates that the company's earnings before interest and taxes (EBIT) are sufficient to cover its interest expenses multiple times over, signifying a reduced risk of default due to insufficient funds to make interest payments.

Furthermore, the company's interest coverage ratio has demonstrated strong performance in the most recent quarters, with numbers exceeding 100, indicating a robust financial position in terms of meeting its interest obligations.

Overall, the trend of Magnolia Oil & Gas Corp's interest coverage ratio reflects improvements in its ability to meet interest payments over recent quarters, providing a positive signal regarding the company's financial health.