Ovintiv Inc (OVV)
Interest coverage
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 1,763,000 | 2,930,000 | 2,762,000 | 2,708,000 | 2,866,000 | 2,859,000 | 3,739,000 | 4,738,000 | 3,882,000 | 4,176,000 | 2,809,000 | 1,187,000 | 1,579,000 | -427,000 | -1,888,000 | -5,776,000 | -5,339,000 | -4,763,000 | -3,008,000 | 1,592,000 |
| Interest expense (ttm) | US$ in thousands | 412,000 | 411,000 | 406,000 | 381,000 | 354,000 | 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 | 378,000 | 391,000 |
| Interest coverage | 4.28 | 7.13 | 6.80 | 7.11 | 8.10 | 9.16 | 12.59 | 15.38 | 12.48 | 12.85 | 8.81 | 3.63 | 4.64 | -1.20 | -5.03 | -15.96 | -14.39 | -12.67 | -7.96 | 4.07 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,763,000K ÷ $412,000K
= 4.28
The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt with its earnings before interest and taxes (EBIT). A higher interest coverage ratio indicates that the company is more capable of covering its interest obligations.
Analyzing the interest coverage ratio of Ovintiv Inc over the provided periods shows a fluctuating trend. As of March 31, 2020, the interest coverage ratio was 4.07, indicating the company's ability to cover its interest payments. However, in the subsequent quarters, the interest coverage ratio turned negative, with values reaching as low as -15.96 as of March 31, 2021. This negative ratio suggests that Ovintiv's EBIT was insufficient to cover its interest expenses during these periods.
From June 30, 2021, the interest coverage ratio gradually improved, reaching positive values by December 31, 2021, at 4.64. This positive trend continued through the following quarters, indicating that Ovintiv's earnings were able to cover its interest payments comfortably.
The interest coverage ratio peaked at 15.38 on March 31, 2023, suggesting a strong ability to meet interest obligations. However, it slightly decreased in the subsequent quarters but remained at healthy levels above 6. By the end of December 31, 2024, the interest coverage ratio stood at 4.28, reflecting Ovintiv's continued ability to cover its interest expenses, albeit at a slightly lower level compared to the peak.
In conclusion, despite some periods of negative interest coverage, Ovintiv Inc managed to improve its financial health and demonstrate a stable ability to cover its interest payments in the later periods, indicating a positive trend in managing its interest obligations.
Peer comparison
Dec 31, 2024