American States Water Company (AWR)

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	184,483	209,282	129,087	147,604	137,153
Interest expense	US$ in thousands	50,382	42,762	27,027	22,834	22,531
Interest coverage		3.66	4.89	4.78	6.46	6.09

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $184,483K ÷ $50,382K
= 3.66

American States Water Company's interest coverage ratio, which measures the company's ability to cover its interest expenses with its earnings before interest and taxes (EBIT), has shown some fluctuations over the years.

In 2020, the interest coverage ratio stood at a healthy 6.09, indicating that the company's operating income was sufficient to cover its interest payments over six times. This suggests a strong financial position and lower risk of default on debt obligations.

The ratio improved slightly in 2021 to 6.46, reflecting a continued ability to comfortably meet interest obligations. However, there was a decline in 2022 to 4.78, indicating a decrease in the company's ability to cover interest expenses.

Although the ratio improved in 2023 to 4.89, it remained below the levels seen in 2020 and 2021, suggesting ongoing challenges in maintaining interest coverage. By the end of 2024, the interest coverage ratio decreased further to 3.66, indicating a potentially higher risk as the company's ability to cover interest expenses diminished.

Overall, the trend in the interest coverage ratio for American States Water Company shows some variability, with periods of strength and weakness. Investors and creditors may want to monitor this ratio closely to assess the company's ability to meet its debt obligations and manage financial risks effectively.