PBF Energy Inc (PBF)

Interest coverage

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	-690,200	2,928,100	3,707,600	560,600	-1,132,100
Interest expense	US$ in thousands	72,000	63,800	246,000	317,500	258,200
Interest coverage		-9.59	45.89	15.07	1.77	-4.38

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $-690,200K ÷ $72,000K
= -9.59

Interest coverage ratio is a vital financial metric that indicates a company's ability to meet its interest obligations. A higher ratio is generally more favorable as it signifies that the company is more capable of servicing its debt.

Analyzing PBF Energy Inc's interest coverage ratio over the past five years reveals a fluctuating trend.

1. December 31, 2020: The interest coverage ratio was at -4.38, indicating that the company's earnings before interest and taxes (EBIT) were insufficient to cover its interest expenses. This low ratio suggests a potential financial strain, as the company may have struggled to meet its interest payments.

2. December 31, 2021: The interest coverage ratio improved to 1.77, but still below 2. This suggests that while PBF Energy Inc's ability to cover its interest expenses has improved compared to the previous year, it remains at a relatively precarious level.

3. December 31, 2022: A significant improvement was observed with the interest coverage ratio rising to 15.07. This indicates a substantial increase in the company's ability to pay interest from its operating earnings, reflecting a more robust financial position.

4. December 31, 2023: The interest coverage ratio further increased to 45.89, signaling a considerable strengthening of PBF Energy Inc's financial health. The company's earnings were significantly more than enough to cover its interest expenses, indicating a lower risk of default.

5. December 31, 2024: However, the interest coverage ratio dropped to -9.59, which is a concerning reversal from the positive trend observed in the previous years. A negative ratio implies that the company's EBIT was insufficient to cover its interest payments, potentially signaling financial distress.

In conclusion, while PBF Energy Inc showed a positive improvement in its interest coverage ratio from 2020 to 2023, the significant drop in 2024 raises concerns about its ability to cover interest expenses. It is important for investors and stakeholders to monitor future financial performance to assess if this trend persists or improves.