MP Materials Corp (MP)
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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | -17,719 | 53,375 | 150,078 | 245,349 | 327,411 | 347,121 | 322,144 | 262,359 | 169,099 | 119,617 | 81,642 | -15,416 | -34,452 |
| Interest expense (ttm) | US$ in thousands | 5,254 | 5,478 | 5,306 | 5,240 | 5,786 | 6,942 | 8,342 | 9,655 | 8,904 | 7,844 | 6,933 | 5,360 | 5,009 |
| Interest coverage | -3.37 | 9.74 | 28.28 | 46.82 | 56.59 | 50.00 | 38.62 | 27.17 | 18.99 | 15.25 | 11.78 | -2.88 | -6.88 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-17,719K ÷ $5,254K
= -3.37
Interest coverage ratio measures a company's ability to meet its interest obligations with its operating income. A higher interest coverage ratio indicates a stronger ability to cover interest expenses.
Analyzing the interest coverage of MP Materials Corporation over the recent quarters, the ratio has shown significant fluctuations. In Q4 2023, the interest coverage was negative at -3.37, indicating that the company's operating income was insufficient to cover its interest expenses. This signifies a potential financial risk and may raise concerns about the company's ability to service its debts.
However, in the preceding quarters, the interest coverage ratio improved significantly, with Q3 2023 showing a strong ratio of 10.89, and further improvements in Q2 2023 and Q1 2023 with ratios of 29.26 and 47.37 respectively. These improvements suggest that MP Materials Corporation had been generating sufficient operating income to comfortably cover its interest payments, indicating a healthier financial position during that period.
Comparing to the ratios from the previous year, such as in Q4 2022 where the interest coverage was 56.65, the recent fluctuations raise questions about the company's financial stability and ability to consistently meet its interest obligations.
In conclusion, while the interest coverage ratio of MP Materials Corporation has shown variability, investors and analysts may need to closely monitor future financial performance to ensure the company's ability to meet its debt obligations and sustain a healthy financial position.
Peer comparison
Dec 31, 2023