The AES Corporation (AES)
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 | 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 | 1,705,000 | 2,055,000 | 1,967,000 | 2,305,000 |
| Interest expense (ttm) | US$ in thousands | 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 | 1,050,000 | 1,045,000 | 1,050,000 | 1,040,000 |
| Interest coverage | 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 | 1.62 | 1.97 | 1.87 | 2.22 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,829,000K ÷ $1,319,000K
= 1.39
The interest coverage ratio for AES Corp. has been relatively stable over the past eight quarters, ranging from 2.89 to 3.53. This ratio indicates the company's ability to meet its interest obligations with its operating income. A higher ratio suggests that the company is more capable of covering its interest payments from its earnings.
Looking at the trend, AES Corp.'s interest coverage ratio has shown a slight decrease from Q1 2022 to Q4 2023, falling from 3.53 to 2.89. This downward trend may raise concerns about the company's ability to comfortably meet its interest payments in the future.
Overall, despite the recent decline in the interest coverage ratio, AES Corp. has maintained a relatively healthy ratio above 2.0, indicating that the company is still generating sufficient operating income to cover its interest expenses. Investors and creditors should continue to monitor changes in this ratio to assess the company's financial health and ability to service its debt obligations effectively.