The AES Corporation (AES)
Interest coverage
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 3,223,000 | 1,829,000 | 836,000 | 369,000 | 1,300,000 |
| Interest expense | US$ in thousands | 1,485,000 | 1,319,000 | 1,117,000 | 911,000 | 1,038,000 |
| Interest coverage | 2.17 | 1.39 | 0.75 | 0.41 | 1.25 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $3,223,000K ÷ $1,485,000K
= 2.17
The interest coverage ratio for The AES Corporation has shown fluctuations over the past five years. In December 2020, the interest coverage ratio was 1.25, indicating that the company generated just enough operating income to cover its interest expenses. However, by December 2021, the interest coverage ratio dropped to 0.41, signaling potential financial distress as the company struggled to meet its interest obligations.
In the following years, there was a slight improvement in the interest coverage ratio. By December 2022, the ratio increased to 0.75, showing some progress in the company's ability to cover its interest payments. In December 2023, the interest coverage ratio further improved to 1.39, indicating a healthier financial position as the company generated more operating income relative to its interest expenses.
The most recent data point as of December 2024, shows a notable improvement in the interest coverage ratio to 2.17. This suggests that The AES Corporation has significantly strengthened its ability to cover its interest payments with operating income.
Overall, the trend in The AES Corporation's interest coverage ratio shows fluctuations but demonstrates a positive trajectory towards better financial health and improved ability to fulfill its interest obligations.