Phillips 66 (PSX)
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 | 3,622,000 | 10,395,000 | 15,258,000 | 2,321,000 | -4,465,000 |
| Interest expense | US$ in thousands | 947,000 | 926,000 | 642,000 | 605,000 | 521,000 |
| Interest coverage | 3.82 | 11.23 | 23.77 | 3.84 | -8.57 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $3,622,000K ÷ $947,000K
= 3.82
The interest coverage ratio of Phillips 66 has shown significant fluctuations over the past few years. In December 2020, the interest coverage ratio was -8.57, indicating that the company's earnings before interest and taxes (EBIT) were insufficient to cover its interest expenses. However, by December 2021, the ratio improved to 3.84, suggesting that the company's ability to cover its interest payments had strengthened.
Subsequently, in December 2022, the interest coverage ratio surged to 23.77, signifying a dramatic improvement and a strong ability to meet interest obligations comfortably. This robust ratio was sustained in December 2023 at 11.23, indicating continued financial health and profitability.
However, by December 2024, there was a decline in the interest coverage ratio to 3.82, which may raise concerns about the company's capacity to cover its interest costs effectively. It is essential for Phillips 66 to monitor and manage its interest coverage ratio consistently to ensure financial stability and sustainability.
Peer comparison
Dec 31, 2024