Name: Interest Coverage

Definition: Interest coverage tells you how easily the company can pay interest on its debt using operating profits. It’s like asking: “Can the company comfortably make its loan payments, or is it barely scraping by?” The higher the ratio, the safer. A very low ratio means debt payments may strain the business, especially if profits drop.

Interpretation:
• In '2021', COP's interest coverage was 12.29, indicating the firm's ability to meet its interest obligations. Industry average for Integrated oil Companies in '2021' stood at 3.28.
• In '2022', COP's interest coverage was 27.76, indicating the firm's ability to meet its interest obligations. The increase since '2021' reflects strengthening financial performance. Industry average for Integrated oil Companies in '2022' stood at 4.04. Industry average increased by 0.77 compared to previous year.
• In '2023', COP's interest coverage was 16.32, indicating the firm's ability to meet its interest obligations. The decline from '2022' may indicate some operational or financial challenges. Industry average for Integrated oil Companies in '2023' stood at 2.58. Industry average declined by 1.46 from previous year.
• In '2024', COP's interest coverage was 13.34, indicating the firm's ability to meet its interest obligations. The decline from '2023' may indicate some operational or financial challenges. Industry average for Integrated oil Companies in '2024' stood at 1.95. Industry average declined by 0.63 from previous year.
Overall, COP's interest coverage has been volatile but showed an upward trend over the past 4 years.

Formula: Interest Coverage = EBIT / Interest Expense

Good Range: Minimum 3-5 desirable; below 1 is risky.