Targa Resources Inc (TRGP)

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 2,699,800 2,633,000 2,407,100 2,429,000 2,626,200 2,542,200 2,467,100 2,269,900 1,729,000 1,023,500 960,100 753,900 802,200 3,674,700 3,609,900 3,577,300 3,598,500 1,078,200 789,000 689,600
Interest expense (ttm) US$ in thousands 767,200 767,500 757,700 748,300 687,700 655,300 606,000 520,600 462,000 420,100 385,300 398,900 402,600 399,600 406,300 408,200 393,100 388,400 379,800 355,200
Interest coverage 3.52 3.43 3.18 3.25 3.82 3.88 4.07 4.36 3.74 2.44 2.49 1.89 1.99 9.20 8.88 8.76 9.15 2.78 2.08 1.94

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $2,699,800K ÷ $767,200K
= 3.52

The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. Looking at the data provided for Targa Resources Inc, we can see a fluctuating trend in the interest coverage ratio over the periods from March 2020 to December 2024.

Initially, in March 2020 and June 2020, the interest coverage ratio was below 2, indicating that the company was barely able to cover its interest expenses with its operating income. However, there was a significant improvement in the ratio starting from September 2020, reaching a peak in December 2021 with a ratio of 9.15. This suggests that the company had a strong ability to meet its interest obligations with its earnings during that period.

Subsequently, the interest coverage ratio declined gradually but remained above 2 from March 2022 to December 2024. While the ratio decreased from its peak in December 2021, it still indicates that Targa Resources Inc was able to comfortably cover its interest expenses with its operating income during these periods.

Overall, the trend in Targa Resources Inc's interest coverage ratio shows improvements in the company's ability to manage its interest payments efficiently, although some fluctuations were observed over the analyzed periods. It is essential for investors and stakeholders to monitor this ratio to assess the company's financial health and ability to handle its debt obligations.