Ameren Corp (AEE)
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 | 1,558,000 | 1,515,000 | 1,333,000 | 1,300,000 | 1,267,000 |
| Interest expense | US$ in thousands | 566,000 | 486,000 | 383,000 | 419,000 | 381,000 |
| Interest coverage | 2.75 | 3.12 | 3.48 | 3.10 | 3.33 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,558,000K ÷ $566,000K
= 2.75
The interest coverage ratio measures a company's ability to meet its interest obligations on outstanding debt. A higher ratio indicates a stronger ability to cover interest expenses with operating income.
Analyzing Ameren Corp.'s interest coverage over the past five years, we observe a fluctuating trend. In 2023, the interest coverage ratio decreased to 2.75 from 3.36 in 2022, indicating a lower ability to cover interest expenses with operating income. This decline suggests that Ameren's operating income may not be as sufficient to meet its interest obligations compared to the previous year.
Despite the decrease in 2023, it is important to note that Ameren's interest coverage ratios in the last five years have generally been above 3, indicating a consistent ability to cover interest expenses with operating income. However, the decreasing trend over the recent years warrants attention and further analysis to understand the factors contributing to this decline and to assess the company's overall financial health and debt management practices.
Peer comparison
Dec 31, 2023