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.