Phillips 66 (PSX)
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 | 3,603,000 | 5,362,000 | 7,746,000 | 8,714,000 | 10,366,000 | 10,519,000 | 14,801,000 | 16,530,000 | 14,650,000 | 14,286,000 | 7,563,000 | 3,903,000 | 2,321,000 | 6,000 | -1,799,000 | -2,701,000 | -4,443,000 | -2,709,000 | -439,000 | 1,833,000 |
| Interest expense (ttm) | US$ in thousands | 947,000 | 942,000 | 932,000 | 964,000 | 926,000 | 897,000 | 833,000 | 699,000 | 642,000 | 590,000 | 584,000 | 594,000 | 605,000 | 602,000 | 583,000 | 556,000 | 521,000 | 498,000 | 475,000 | 473,000 |
| Interest coverage | 3.80 | 5.69 | 8.31 | 9.04 | 11.19 | 11.73 | 17.77 | 23.65 | 22.82 | 24.21 | 12.95 | 6.57 | 3.84 | 0.01 | -3.09 | -4.86 | -8.53 | -5.44 | -0.92 | 3.88 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $3,603,000K ÷ $947,000K
= 3.80
Interest coverage is a financial ratio that indicates a company's ability to meet its interest payments on outstanding debt. A higher interest coverage ratio signifies a healthier financial position as it suggests the company is generating enough operating income to cover its interest expenses.
Looking at the data for Phillips 66's interest coverage from March 31, 2020, to December 31, 2024, there are significant fluctuations in the values. The interest coverage ratio started at a moderate level of 3.88 in March 2020, indicating the company was able to cover its interest payments about 3.88 times with its operating income.
However, the interest coverage ratio decreased sharply in the subsequent quarters, dipping into negative values from June 2020 to September 2021. Negative interest coverage ratios suggest that the company's operating income was insufficient to cover its interest expenses during those periods, which may raise concerns about its financial health and ability to service its debt.
From December 31, 2021 onwards, the interest coverage ratio shows a positive trend, gradually increasing to 3.80 by December 31, 2024. This improvement in the interest coverage ratio indicates that Phillips 66's operating income has grown sufficiently to cover its interest obligations, reflecting a more stable financial position.
The most recent interest coverage ratio of 3.80 as of December 31, 2024, suggests that Phillips 66's ability to meet its interest payments has improved compared to the earlier periods, but it may still be prudent for stakeholders to monitor the trend over time to ensure the company's financial health remains robust.
Peer comparison
Dec 31, 2024