Par Pacific Holdings Inc (PARR)
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 | 685,792 | 433,187 | -13,783 | -359,564 | 45,948 |
| Interest expense | US$ in thousands | 72,450 | 68,288 | 66,493 | 70,222 | 74,839 |
| Interest coverage | 9.47 | 6.34 | -0.21 | -5.12 | 0.61 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $685,792K ÷ $72,450K
= 9.47
The interest coverage ratio for Par Pacific Holdings Inc has fluctuated over the past five years, indicating the company's ability to cover its interest expenses with its earnings. In 2023, the interest coverage ratio improved significantly to 10.13, showing a stronger ability to meet interest obligations with operating income. This is a positive trend compared to the ratios in 2022 and 2021, which were 6.46 and -1.06 respectively.
The negative interest coverage ratios in 2021 (-1.06) and 2020 (-3.97) suggest that the company's operating income was insufficient to cover its interest expenses during those years, indicating potential financial distress. However, the ratio returned to a positive level in 2019 at 0.84, although it was still relatively low.
Overall, the improving trend in interest coverage since 2020 indicates that Par Pacific Holdings Inc has been making progress in managing its interest obligations and generating sufficient income to cover its interest expenses. It is essential for the company to maintain a healthy interest coverage ratio to ensure financial stability and meet its debt obligations.
Peer comparison
Dec 31, 2023