NOV Inc. (NOV)

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	922,000	651,000	316,000	-153,000	-2,695,000
Interest expense	US$ in thousands	91,000	60,000	59,000	77,000	84,000
Interest coverage		10.13	10.85	5.36	-1.99	-32.08

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $922,000K ÷ $91,000K
= 10.13

The interest coverage ratio for NOV Inc. has shown significant fluctuation over the past five years.

As of December 31, 2020, the interest coverage ratio was -32.08, indicating that the company's operating income was insufficient to cover its interest expenses, signaling a high risk of default on its debt obligations.

By December 31, 2021, the interest coverage ratio improved slightly to -1.99, but it remained below 1, which suggests that the company was still struggling to generate enough earnings to cover its interest payments.

However, there was a notable turnaround by December 31, 2022, when the interest coverage ratio increased to 5.36, indicating that NOV Inc. was able to comfortably meet its interest obligations with its operating income.

This positive trend continued in the subsequent years, with the interest coverage ratios of 10.85 by December 31, 2023, and 10.13 by December 31, 2024, demonstrating the company's improved ability to service its debt with its operating profits.

Overall, the improvement in NOV Inc.'s interest coverage ratio from negative to comfortably positive levels over the years reflects a healthier financial position and reduced risk of default on its debt obligations.