Viper Energy Ut (VNOM)

Interest coverage

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Earnings before interest and tax (EBIT)	US$ in thousands	294,947	680,482	361,572	52,914	193,540
Interest expense	US$ in thousands	48,907	40,409	34,044	33,000	978
Interest coverage		6.03	16.84	10.62	1.60	197.89

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $294,947K ÷ $48,907K
= 6.03

The interest coverage ratio of Viper Energy Ut has fluctuated over the past five years. In 2019, the company had an exceptionally high interest coverage ratio of 197.89, indicating a very strong ability to cover interest payments with its operating income. However, in 2020, the ratio dropped significantly to 1.60, suggesting a potential strain on the company's ability to cover interest expenses with its earnings.

In the following years, the interest coverage ratio improved, with values of 10.62 in 2021, 16.84 in 2022, and 6.03 in 2023. While the ratio has recovered from the low point in 2020, it remains below the exceptionally high level seen in 2019. This indicates that the company's ability to cover its interest expenses with operating income has improved but may still warrant attention to ensure financial stability and debt repayment capacity. Overall, monitoring the trend of the interest coverage ratio is essential for assessing Viper Energy Ut's financial health and ability to meet its debt obligations.