Weatherford International PLC (WFRD)
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 | 820,000 | 412,000 | 116,000 | -1,486,000 | 900,000 |
| Interest expense | US$ in thousands | 123,000 | 179,000 | 15,000 | 15,000 | 362,000 |
| Interest coverage | 6.67 | 2.30 | 7.73 | -99.07 | 2.49 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $820,000K ÷ $123,000K
= 6.67
Weatherford International plc's interest coverage ratio has shown a significant improvement over the past three years. The ratio was 0.45 in 2021, indicating that the company's operating income was only able to cover 45% of its interest expenses. This was a concerning sign as it suggested that the company may have been at risk of financial distress.
However, in 2022, the interest coverage ratio improved to 2.42, reflecting a positive shift as the company's operating income was now able to cover 242% of its interest expenses. This improvement suggests that Weatherford International plc's financial position strengthened compared to the previous year, providing a better buffer against potential financial risks.
By the end of 2023, the interest coverage ratio further increased to 6.67, signaling a significant enhancement in the company's ability to meet its interest obligations. Weatherford International plc's operating income now covers 667% of its interest expenses, highlighting a strong financial position and decreased vulnerability to default risk.
Overall, the trend in Weatherford International plc's interest coverage ratio from 2021 to 2023 indicates a positive development in the company's financial health and its capacity to manage debt obligations effectively.
Peer comparison
Dec 31, 2023