Allete Inc (ALE)

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	355,800	233,300	211,400	187,600	243,900
Interest expense	US$ in thousands	80,800	75,200	69,100	65,600	64,900
Interest coverage		4.40	3.10	3.06	2.86	3.76

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $355,800K ÷ $80,800K
= 4.40

Allete, Inc.'s interest coverage ratio has fluctuated over the past five years. The interest coverage ratio measures a company's ability to meet its interest obligations with its earnings before interest and taxes (EBIT). A higher ratio indicates that the company is more capable of servicing its debt.

The trend for Allete, Inc.'s interest coverage over the period from 2019 to 2023 shows a slight decrease in the ratio from 3.10 in 2019 to 2.51 in 2023. Although the ratio remained above 2.0 in all years, indicating that the company's earnings were more than double its interest expense, the slight decrease suggests that the company may have been less able to cover its interest payments in 2023 compared to previous years.

A ratio of around 2.0 typically implies that the company is generating just enough earnings to cover its interest expenses. However, it is important to note that interpreting interest coverage ratios should take into account the company's specific industry norms and overall financial health. The trend in Allete, Inc.'s interest coverage ratio indicates that analysts and investors may want to monitor the company's financial performance and debt servicing capabilities closely in the coming years.