Matador Resources Company (MTDR)

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	1,153,620	1,680,730	734,365	-562,112	197,182
Interest expense	US$ in thousands	121,520	67,164	74,687	76,692	73,873
Interest coverage		9.49	25.02	9.83	-7.33	2.67

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $1,153,620K ÷ $121,520K
= 9.49

Matador Resources Co's interest coverage ratio has exhibited significant fluctuations over the past five years. The interest coverage ratio measures the company's ability to meet its interest obligations with its operating income.

In 2023, Matador Resources Co's interest coverage ratio stands at 9.95, reflecting a decrease from the previous year. Despite this decrease, the ratio indicates that the company's operating income is nearly ten times greater than its interest expenses, suggesting a healthy ability to cover interest payments.

The sharp increase in interest coverage to 26.19 in 2022 indicates a substantial improvement in the company's ability to cover its interest expenses, which may signify enhanced financial stability and reduced financial risk.

In 2021, the interest coverage ratio of 10.62 shows that the company's operating income was more than ten times its interest expenses, indicating strong financial health and the ability to comfortably meet debt obligations.

The relatively low interest coverage ratio in 2020 of 2.13 raises concerns about the company's ability to cover its interest expenses with its operating income. This low ratio suggests higher financial risk and potential difficulties meeting debt obligations.

Similarly, in 2019, the interest coverage ratio of 3.19 indicates that Matador Resources Co's operating income was over three times its interest expenses, implying a moderate ability to cover interest payments.

Overall, the trend in Matador Resources Co's interest coverage ratio shows fluctuations over the years, with varying levels of financial strength and risk. It is crucial for investors and stakeholders to closely monitor changes in the interest coverage ratio to assess the company's ability to manage its debt obligations effectively.