Patterson-UTI Energy Inc (PTEN)
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 | -889,737 | 360,314 | 208,118 | -675,269 | -890,248 |
| Interest expense | US$ in thousands | 71,963 | 52,870 | 40,256 | 41,978 | 40,770 |
| Interest coverage | -12.36 | 6.82 | 5.17 | -16.09 | -21.84 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $-889,737K ÷ $71,963K
= -12.36
Based on the provided data for Patterson-UTI Energy Inc's interest coverage ratio over the years, the trend shows fluctuation. In December 2020 and 2021, the interest coverage ratios were significantly negative at -21.84 and -16.09, respectively. These negative values indicate that the company's earnings before interest and taxes (EBIT) were not sufficient to cover its interest obligations during those periods.
However, there was a notable improvement in the company's interest coverage in the subsequent years. By December 2022, the interest coverage ratio had turned positive at 5.17, indicating that the company's EBIT was more than sufficient to cover its interest expenses. This positive trend continued in December 2023 and 2024, with the interest coverage ratios increasing to 6.82 and then declining to -12.36, respectively.
It is important to note that a negative interest coverage ratio signifies financial distress and may indicate the company's inability to meet its debt obligations. The turnaround in the interest coverage ratio from negative to positive values indicates an improvement in the company's financial health and ability to service its debt obligations. However, the decline in 2024 highlights fluctuations in the company's financial performance and the need for ongoing monitoring of its interest coverage ratio to ensure sustainable financial stability.
Peer comparison
Dec 31, 2024