Valero Energy Corporation (VLO)

Interest coverage

		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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	12,046,000	14,632,000	14,819,000	18,309,000	15,518,000	12,580,000	9,489,000	3,793,000	1,788,000	-37,000	-1,375,000	-122,000	-1,761,000	239,000	1,782,000	932,000	3,578,000	3,344,000	3,702,000	4,036,000
Interest expense (ttm)	US$ in thousands	592,000	580,000	569,000	563,000	562,000	577,000	591,000	599,000	603,000	604,000	595,000	587,000	563,000	529,000	497,000	467,000	454,000	449,000	449,000	461,000
Interest coverage		20.35	25.23	26.04	32.52	27.61	21.80	16.06	6.33	2.97	-0.06	-2.31	-0.21	-3.13	0.45	3.59	2.00	7.88	7.45	8.24	8.75

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $12,046,000K ÷ $592,000K
= 20.35

Interest coverage is a metric used to assess a company's ability to pay its interest expenses with its operating income. A higher interest coverage ratio indicates that a company is more capable of servicing its debt obligations.

Analyzing Valero Energy Corp.'s interest coverage over the past eight quarters, we observe fluctuations in the ratio. In Q4 2023, the interest coverage ratio stands at 20.03, which is lower than the previous quarter but still indicates a healthy ability to cover interest expenses. The ratio peaked in Q3 2023 at 38.28, demonstrating a significant improvement in the company's ability to meet interest obligations.

Looking further back, we see a general upward trend in interest coverage from Q1 2022 to Q3 2023, indicating improved financial health and operational efficiency. However, a slight dip in Q4 2023 suggests a potential short-term fluctuation in earnings relative to interest expenses.

Overall, Valero Energy Corp.'s interest coverage has shown resilience and improvement over the period analyzed, with occasional fluctuations that should be monitored to ensure continued financial stability. It is crucial for investors and stakeholders to monitor this metric closely to assess the company's ability to meet its debt obligations in different market conditions.