Vital Energy Inc. (VTLE)

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	-43,467	661,560	762,135	262,038	-773,110
Interest expense	US$ in thousands	177,794	149,819	125,121	113,385	105,009
Interest coverage		-0.24	4.42	6.09	2.31	-7.36

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $-43,467K ÷ $177,794K
= -0.24

Interest coverage is a financial ratio that indicates a company's ability to cover its interest expenses with its operating income. For Vital Energy Inc., the interest coverage ratio has shown fluctuations over the years based on the data provided:

1. On December 31, 2020, the interest coverage ratio was negative at -7.36. This indicates that the company's operating income was insufficient to cover its interest expenses during that period.

2. By December 31, 2021, the interest coverage ratio improved to 2.31, suggesting that the company's operating income was able to cover its interest expenses, albeit at a relatively lower level.

3. The ratio further improved to 6.09 by December 31, 2022, indicating a stronger ability to cover interest expenses with operating income.

4. However, by December 31, 2023, the interest coverage ratio decreased slightly to 4.42, although it still reflected a healthy coverage ratio.

5. The ratio took a downturn by December 31, 2024, dropping to -0.24. This negative ratio suggests that the company's operating income was insufficient to cover its interest expenses during that period, which could raise concerns about the company's financial health and ability to meet its debt obligations.

Overall, Vital Energy Inc. has shown varying levels of interest coverage over the years, with improvements in certain periods but also facing challenges in others, particularly in 2020 and 2024. It is essential for stakeholders to monitor this ratio closely to assess the company's ability to meet its interest obligations and manage its debt effectively.