Nabors Industries Ltd (NBR)
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 | 252,721 | -110,830 | -342,175 | -542,081 | -406,998 |
| Interest expense | US$ in thousands | 185,285 | 177,895 | 171,476 | 206,274 | 204,311 |
| Interest coverage | 1.36 | -0.62 | -2.00 | -2.63 | -1.99 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $252,721K ÷ $185,285K
= 1.36
Interest coverage is a financial ratio that indicates a company's ability to meet its interest payment obligations. A higher interest coverage ratio signifies that the company is more capable of servicing its debt. In the case of Nabors Industries Ltd, the interest coverage ratio has varied significantly over the past five years.
In 2023, the interest coverage ratio improved to 1.46, indicating that the company's earnings before interest and taxes (EBIT) were sufficient to cover its interest expenses. This signifies an improvement from the previous year when the ratio was only 0.25, suggesting a better ability to meet interest payments.
However, in 2021 and 2020, Nabors Industries Ltd had negative interest coverage ratios of -1.23 and -1.40 respectively. These negative ratios indicate that the company's EBIT was not enough to cover its interest expenses during those years, raising concerns about its financial health.
The interest coverage ratio in 2019 was also negative at -0.35, further highlighting the challenges the company faced in meeting its interest payments at that time.
Overall, the trend in Nabors Industries Ltd's interest coverage ratio shows fluctuations, with improvements in recent years but with negative ratios in some years, indicating varying levels of financial strain in servicing its debt obligations.
Peer comparison
Dec 31, 2023