Avista Corporation (AVA)
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 | 328,000 | 277,216 | 193,279 | 226,846 | 226,267 |
| Interest expense | US$ in thousands | 145,000 | 139,666 | 114,974 | 102,165 | 100,978 |
| Interest coverage | 2.26 | 1.98 | 1.68 | 2.22 | 2.24 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $328,000K ÷ $145,000K
= 2.26
The interest coverage ratio is a key financial metric used to evaluate a company's ability to meet its interest obligations on outstanding debt. For Avista Corporation, the interest coverage ratio has fluctuated over the past five years:
- As of December 31, 2020, the interest coverage ratio was 2.24, indicating that Avista's operating income was 2.24 times its interest expense. This suggests a relatively comfortable level of coverage.
- However, by December 31, 2022, the interest coverage ratio had decreased to 1.68, signaling a potential reduction in Avista's ability to cover its interest payments with operating income.
- The ratio improved slightly by December 31, 2023, reaching 1.98, but still below the levels seen in previous years.
- As of December 31, 2024, the interest coverage ratio rose to 2.26, showing a positive trend towards better coverage of interest expenses.
Overall, the trend in Avista Corporation's interest coverage ratio indicates fluctuations in its ability to meet interest obligations over the past five years. It is important for investors and stakeholders to monitor this ratio to assess the company's financial health and risk management related to debt.
Peer comparison
Dec 31, 2024