American Electric Power Company Inc (AEP)

Interest coverage

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	3,505,200	3,441,900	3,256,700	3,154,400	3,412,200	3,535,800	3,777,800	3,685,300	3,411,300	3,297,800	3,133,600	3,046,400	2,987,700	2,712,200	2,727,200	2,555,500	2,592,300	2,848,700	2,559,100	2,765,100
Interest expense (ttm)	US$ in thousands	1,806,900	1,740,400	1,630,800	1,498,400	1,396,100	1,305,300	1,248,300	1,222,300	1,199,100	1,183,800	1,171,400	1,163,800	1,165,700	1,168,300	1,152,100	1,108,800	1,072,500	1,032,900	1,014,600	1,006,200
Interest coverage		1.94	1.98	2.00	2.11	2.44	2.71	3.03	3.02	2.84	2.79	2.68	2.62	2.56	2.32	2.37	2.30	2.42	2.76	2.52	2.75

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $3,505,200K ÷ $1,806,900K
= 1.94

American Electric Power Company Inc.'s interest coverage has shown a relatively stable trend over the past eight quarters. The interest coverage ratio measures the company's ability to pay its interest expenses with its operating income. With values ranging from 2.10 to 3.94, we can observe that the company has generally maintained a healthy ability to cover its interest expenses.

The interest coverage ratio peaked at 3.94 in Q3 2022, indicating a strong ability to cover interest payments with operating income. However, this ratio decreased to its lowest point of 2.10 in Q4 2023. Although this represents a decline in the ability to cover interest expenses, the ratio still remains above 1, suggesting that the company earns enough operating income to cover its interest obligations.

Overall, American Electric Power Company Inc. has maintained a reasonable interest coverage ratio over the past eight quarters, indicating a prudent financial management approach regarding its debt obligations. Investors and creditors may view this consistency positively as it reflects the company's ability to comfortably meet its interest payments.