Valaris Ltd (VAL)
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 | 455,000 | 153,100 | 270,200 | -4,401,400 | -4,818,600 |
| Interest expense | US$ in thousands | 84,800 | 68,900 | 45,300 | 278,200 | 290,600 |
| Interest coverage | 5.37 | 2.22 | 5.96 | -15.82 | -16.58 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $455,000K ÷ $84,800K
= 5.37
Interest coverage ratio is a financial metric used to evaluate a company's ability to meet its interest obligations on outstanding debt.
Based on the data provided for Valaris Ltd:
- As of December 31, 2020, the interest coverage ratio was -16.58, indicating that the company's operating income was insufficient to cover its interest expenses, raising concerns about its ability to meet interest payments.
- The interest coverage ratio improved slightly to -15.82 as of December 31, 2021, but it still remained negative, signaling ongoing financial challenges for the company.
- By December 31, 2022, the interest coverage ratio turned positive at 5.96, suggesting that the company's operating income was more than sufficient to cover its interest expenses, reflecting a positive trend in the company's financial health.
- However, the interest coverage ratio decreased to 2.22 by December 31, 2023, indicating a potential decrease in the company's ability to cover its interest obligations with its operating income.
- As of December 31, 2024, the interest coverage ratio improved to 5.37, signaling a recovery in the company's ability to meet its interest payments.
Overall, the trend in Valaris Ltd's interest coverage ratio shows significant fluctuations over the years, with periods of negative coverage raising concerns about its financial stability, followed by improvements and potential recovery. It is essential for stakeholders to monitor this ratio closely to assess the company's financial health and ability to manage its debt obligations.
Peer comparison
Dec 31, 2024