Cactus Inc (WHD)
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 | 264,366 | 174,748 | 75,427 | 70,039 | 183,150 |
| Interest expense | US$ in thousands | 5,722 | 1,063 | 959 | 959 | 1,356 |
| Interest coverage | 46.20 | 164.39 | 78.65 | 73.03 | 135.07 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $264,366K ÷ $5,722K
= 46.20
The interest coverage ratio measures a company's ability to pay interest expenses on its outstanding debt using its operating income. A higher interest coverage ratio indicates that the company is more capable of servicing its interest payments.
For Cactus Inc, the interest coverage ratio has fluctuated over the past five years. In 2023, the interest coverage ratio stands at 46.20, significantly lower than the ratios reported in 2022 (164.39) and 2019 (135.07). This may suggest a potential concern regarding the company's ability to cover its interest expenses with its operating income in 2023.
However, it is essential to note that the interest coverage ratio can vary between industries, and a ratio above one indicates that the company is generating enough income to cover its interest expenses. Cactus Inc's ratios for all five years are comfortably above one, indicating that the company has been able to cover its interest payments adequately.
Overall, while the interest coverage ratio for Cactus Inc has seen fluctuations, it generally suggests that the company has had the ability to meet its interest obligations with its operating income over the years, with a temporary decline noted in 2023.
Peer comparison
Dec 31, 2023