Avista Corporation (AVA)

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	257,690	222,084	203,399	183,874	190,242	197,025	201,837	209,306	228,232	244,944	249,228	252,402	233,810	226,723	229,043	243,206	331,365	331,294	336,423	343,290
Interest expense (ttm)	US$ in thousands	5,156	5,736	5,587	5,483	4,441	4,300	4,100	4,029	4,304	4,817	4,843	4,945	30,360	52,674	78,405	103,708	103,012	102,510	100,931	100,590
Interest coverage		49.98	38.72	36.41	33.54	42.84	45.82	49.23	51.95	53.03	50.85	51.46	51.04	7.70	4.30	2.92	2.35	3.22	3.23	3.33	3.41

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $257,690K ÷ $5,156K
= 49.98

Based on the interest coverage ratios of Avista Corp. over the past eight quarters, we can observe fluctuations in the company's ability to cover its interest expenses with its earnings before interest and taxes (EBIT). The interest coverage ratio provides insight into the company's capacity to meet its interest obligations from its operating income.

The interest coverage ratio for Avista Corp. ranged from a low of 1.55 in Q1 2023 to a high of 2.08 in Q1 2022. A ratio below 1 indicates that the company may have difficulty meeting its interest payments with its current earnings. Avista's ratios have generally been above 1, suggesting that the company has been able to cover its interest expenses with its operating income.

The declining trend in the interest coverage ratio from Q1 2022 to Q1 2023 (2.08 to 1.55) indicates a potential decrease in the company's ability to cover interest costs over this period. It is essential for investors and creditors to monitor this trend closely as a declining interest coverage ratio may signal financial distress or increasing financial risk for the company.

Overall, while Avista Corp. has maintained interest coverage ratios above 1 over the past eight quarters, the downward trend in recent quarters warrants further analysis to assess the company's ability to service its debt obligations effectively.