Viper Energy Ut (VNOM)

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	571,189	575,742	673,042	618,643	594,567	606,884	541,340	629,392	662,344	629,580	537,997	400,757	292,163	120,146	63,685	-12,014	-6,435	95,537	116,763	192,317
Interest expense (ttm)	US$ in thousands	74,106	71,721	66,185	58,809	48,907	42,431	41,959	40,450	40,409	40,041	37,638	35,829	34,044	32,291	32,201	31,897	33,000	34,857	30,446	25,490
Interest coverage		7.71	8.03	10.17	10.52	12.16	14.30	12.90	15.56	16.39	15.72	14.29	11.19	8.58	3.72	1.98	-0.38	-0.20	2.74	3.84	7.54

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $571,189K ÷ $74,106K
= 7.71

The interest coverage ratio measures a company's ability to pay interest expenses on its outstanding debt. A higher interest coverage ratio indicates that the company is more capable of servicing its interest obligations.

Analyzing the interest coverage data of Viper Energy Ut from March 31, 2020, to December 31, 2024, reveals fluctuations in the company's ability to cover its interest expenses. The interest coverage ratio ranged from a relatively healthy 7.54 on March 31, 2020, to a worrisome -0.38 on March 31, 2021, indicating a period of financial strain where the company's earnings were insufficient to cover its interest payments.

However, the company showed improvement in its interest coverage ratio from June 30, 2021, onwards, reaching a peak of 16.39 on December 31, 2022. This trend suggests that Viper Energy Ut's earnings were more than sufficient to cover its interest expenses, reflecting a stronger financial position. The company maintained relatively robust interest coverage ratios above 10 from March 31, 2022, to June 30, 2024, indicating continued stability.

Overall, the interest coverage ratio of Viper Energy Ut fluctuated over the analyzed period but generally improved after facing challenges in 2021. An interest coverage ratio above 1 indicates that the company is generating enough operating income to cover its interest payments, and Viper Energy Ut's trend towards higher ratios is a positive indicator of its financial health and ability to fulfill its debt obligations.