The AES Corporation (AES)
Interest coverage
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 3,130,000 | 2,637,000 | 2,319,000 | 2,049,000 | 1,829,000 | 968,000 | 1,144,000 | 956,000 | 836,000 | 758,000 | 627,000 | 752,000 | 369,000 | 1,743,000 | 842,000 | 884,000 | 1,300,000 | 758,000 | 1,538,000 | 1,637,000 |
| Interest expense (ttm) | US$ in thousands | 1,485,000 | 1,478,000 | 1,425,000 | 1,346,000 | 1,319,000 | 1,270,000 | 1,220,000 | 1,189,000 | 1,117,000 | 1,055,000 | 1,021,000 | 979,000 | 911,000 | 966,000 | 1,014,000 | 995,000 | 1,038,000 | 1,003,000 | 963,000 | 1,018,000 |
| Interest coverage | 2.11 | 1.78 | 1.63 | 1.52 | 1.39 | 0.76 | 0.94 | 0.80 | 0.75 | 0.72 | 0.61 | 0.77 | 0.41 | 1.80 | 0.83 | 0.89 | 1.25 | 0.76 | 1.60 | 1.61 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $3,130,000K ÷ $1,485,000K
= 2.11
The interest coverage ratio for The AES Corporation fluctuated over the period under consideration. It started at a relatively low level of 1.61 in March 2020, indicating that the company's operating income was just sufficient to cover its interest expenses. The ratio remained relatively stable around 1.60 for the next few quarters before dropping significantly to 0.76 in September 2020, suggesting a potential strain on the company's ability to cover interest payments with its operating income.
There was a slight improvement in December 2020 to 1.25, but the ratio decreased again to 0.89 in March 2021 and 0.83 in June 2021, indicating ongoing challenges in meeting interest obligations. The ratio improved significantly to 1.80 in September 2021, signaling a better ability to cover interest expenses with operating income.
However, the ratio dropped sharply to 0.41 in December 2021, suggesting a significant deterioration in the company's ability to cover interest payments. Subsequently, the ratio increased to 0.77 in March 2022, 0.61 in June 2022, and 0.72 in September 2022, indicating continued difficulties in meeting interest obligations.
There was a slight improvement in the ratio to 0.75 in December 2022, followed by further increases to 0.80 in March 2023 and 0.94 in June 2023. The ratio remained relatively stable around 0.76 in September 2023 before increasing to 1.39 in December 2023, 1.52 in March 2024, 1.63 in June 2024, 1.78 in September 2024, and finally reaching 2.11 in December 2024, reflecting an improvement in the company's ability to cover interest expenses with operating income towards the end of the period.