Constellation Energy Corp (CEG)
Interest coverage
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | ||
|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 2,914,000 | 2,844,000 | 1,590,000 | -71,000 | -297,000 | -284,000 |
| Interest expense (ttm) | US$ in thousands | 431,000 | 356,000 | 349,000 | 302,000 | 250,000 | 254,000 |
| Interest coverage | 6.76 | 7.99 | 4.56 | -0.24 | -1.19 | -1.12 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $2,914,000K ÷ $431,000K
= 6.76
Interest coverage is a financial ratio that measures a company's ability to meet its interest obligations on outstanding debt. A higher interest coverage ratio indicates that the company is better able to cover its interest expenses with its operating income. For Constellation Energy Corporation, we observe fluctuations in the interest coverage ratio over the past five quarters.
In Q4 2023, the interest coverage ratio was 3.65, which suggests that the company generated operating income 3.65 times greater than its interest expenses for that quarter. This is a positive sign of financial health and indicates a strong ability to meet debt obligations.
Similarly, in Q3 2023, the interest coverage ratio improved to 4.15, indicating an even stronger ability to cover interest expenses.
However, in Q2 2023, the interest coverage ratio dropped to 1.31, which may indicate a slight strain on meeting interest obligations with operating income.
The lowest interest coverage ratio observed was in Q1 2023 at 0.22, which suggests that the company's operating income was only able to cover 22% of its interest expenses during that period. This could be a cause for concern as it indicates a potential risk of default on interest payments.
In Q4 2022, the interest coverage ratio was 1.92, showing some improvement from the previous quarter but still below the ideal level.
Overall, Constellation Energy Corporation's interest coverage has shown variability over the past five quarters, with some quarters indicating ample ability to cover interest expenses, while others raise concerns about the company's debt servicing ability. Monitoring this ratio closely will be essential for assessing the company's financial health and debt management strategies.
Peer comparison
Dec 31, 2023