NOV Inc. (NOV)
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 | 708,000 | 714,000 | 609,000 | 500,000 | 316,000 | 142,000 | 17,000 | -74,000 | -158,000 | -457,000 | -507,000 | -620,000 | -2,700,000 | -2,800,000 | -2,864,000 | -8,483,000 | -6,364,000 | -5,898,000 | -5,685,000 | 104,000 |
| Interest expense (ttm) | US$ in thousands | 88,000 | 86,000 | 82,000 | 80,000 | 78,000 | 76,000 | 76,000 | 76,000 | 77,000 | 77,000 | 79,000 | 82,000 | 84,000 | 90,000 | 94,000 | 97,000 | 100,000 | 97,000 | 96,000 | 94,000 |
| Interest coverage | 8.05 | 8.30 | 7.43 | 6.25 | 4.05 | 1.87 | 0.22 | -0.97 | -2.05 | -5.94 | -6.42 | -7.56 | -32.14 | -31.11 | -30.47 | -87.45 | -63.64 | -60.80 | -59.22 | 1.11 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $708,000K ÷ $88,000K
= 8.05
Interest coverage is a financial ratio that measures a company's ability to pay its interest expenses on outstanding debt. The interest coverage ratio is calculated by dividing a company's earnings before interest and taxes (EBIT) by its interest expenses.
Based on the data provided for NOV Inc, we observe fluctuations in the interest coverage ratio over the past eight quarters. In Q4 2023, the interest coverage ratio was 12.83, indicating that the company could cover its interest expenses approximately 12.83 times with its earnings before interest and taxes (EBIT). This ratio remained relatively strong compared to previous quarters, such as Q3 2022 and Q2 2022, where the ratio was significantly lower at 1.94 and 0.12, respectively.
The trend of increasing interest coverage ratios from negative values in Q1 2022 to positive values in Q4 2023 suggests an improvement in NOV Inc's ability to meet its interest obligations. The significant increase in the ratio from 5.63 in Q4 2022 to 12.83 in Q4 2023 indicates a positive trend in the company's financial performance and its ability to generate sufficient earnings to cover its interest expenses.
Overall, the increasing trend in NOV Inc's interest coverage ratio reflects a stronger financial position and a lower risk of default on its debt obligations. It shows that the company's earnings are growing at a faster rate than its interest expenses, which is a positive indicator for investors and creditors.
Peer comparison
Dec 31, 2023