CMS Energy Corporation (CMS)
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 | 1,677,000 | 1,461,000 | 1,424,000 | 1,313,000 | 1,449,000 | 1,888,000 | 1,914,000 | 1,949,000 | 1,948,000 | 1,490,000 | 1,538,000 | 1,502,000 | 1,394,000 | 1,345,000 | 1,339,000 | 1,296,000 | 1,271,000 | 1,254,000 | 1,188,000 | 1,220,000 |
| Interest expense (ttm) | US$ in thousands | 643,000 | 610,000 | 576,000 | 542,000 | 519,000 | 506,000 | 501,000 | 500,000 | 500,000 | 501,000 | 506,000 | 508,000 | 521,000 | 469,000 | 472,000 | 476,000 | 460,000 | 506,000 | 487,000 | 468,000 |
| Interest coverage | 2.61 | 2.40 | 2.47 | 2.42 | 2.79 | 3.73 | 3.82 | 3.90 | 3.90 | 2.97 | 3.04 | 2.96 | 2.68 | 2.87 | 2.84 | 2.72 | 2.76 | 2.48 | 2.44 | 2.61 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,677,000K ÷ $643,000K
= 2.61
Interest coverage is a key financial ratio that indicates a company's ability to meet its interest payment obligations on outstanding debt. It is calculated by dividing a company's earnings before interest and taxes (EBIT) by its interest expenses. A higher interest coverage ratio is generally favorable as it suggests that the company has sufficient earnings to cover its interest payments.
Analyzing the interest coverage ratio of CMS Energy Corporation based on the provided data reveals that the company's ability to cover its interest obligations has fluctuated over the past eight quarters. The interest coverage ratio ranged from a low of 1.81 in Q3 2023 to a high of 2.38 in Q4 2022.
The trend in CMS Energy Corporation's interest coverage ratio shows some variability, with occasional fluctuations above and below the ideal benchmark of 2. A ratio below 2 indicates that the company may have difficulty meeting its interest payments from operating earnings alone. Conversely, a ratio above 2 suggests a healthier financial position with more earnings available to cover interest expenses.
Overall, while CMS Energy Corporation's interest coverage ratios have demonstrated some variability, the company has maintained a generally reasonable ability to cover its interest payments over the period under review. It is important for investors and stakeholders to continue monitoring this ratio to assess the company's financial health and ability to meet its debt obligations.
Peer comparison
Dec 31, 2023