Ovintiv Inc (OVV)
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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 2,865,000 | 2,865,000 | 3,731,000 | 4,727,000 | 3,871,000 | 4,157,000 | 2,806,000 | 1,187,000 | 1,579,000 | -430,000 | -1,899,000 | -5,796,000 | -5,359,000 | -4,780,000 |
| Interest expense (ttm) | US$ in thousands | 355,000 | 312,000 | 297,000 | 308,000 | 311,000 | 325,000 | 319,000 | 327,000 | 340,000 | 355,000 | 375,000 | 362,000 | 371,000 | 376,000 |
| Interest coverage | 8.07 | 9.18 | 12.56 | 15.35 | 12.45 | 12.79 | 8.80 | 3.63 | 4.64 | -1.21 | -5.06 | -16.01 | -14.44 | -12.71 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $2,865,000K ÷ $355,000K
= 8.07
The interest coverage ratio measures a company's ability to meet its interest obligations. A higher ratio indicates a stronger ability to cover interest expenses.
Looking at the trend in Ovintiv Inc's interest coverage ratio over the past eight quarters, we observe fluctuations. In Q1 2022, the interest coverage ratio was at a relatively low level of 3.20, indicating potential challenges in covering interest costs at that time. However, there was a significant improvement in subsequent quarters, with the ratio increasing to 8.41 in Q2 2022 and further rising to 12.49 in Q3 2022.
The trend continued positively in 2023, with notable improvements in interest coverage. In Q1 2023, the ratio increased to 15.14, reflecting a robust ability to cover interest expenses. This strong performance was maintained in Q2 2023, with the interest coverage ratio reaching 12.38.
While the interest coverage ratio slightly decreased in Q3 2023 and Q4 2023 to 8.88 and 7.87 respectively, it remains at levels above 7, indicating that Ovintiv Inc still has a solid capacity to meet its interest obligations.
Overall, the trend in Ovintiv Inc's interest coverage ratio demonstrates fluctuations but generally shows an improving ability to cover interest expenses, with some variations in recent quarters. Monitoring this ratio in conjunction with other financial metrics can provide a comprehensive view of the company's financial health and performance.
Peer comparison
Dec 31, 2023