CenterPoint Energy Inc (CNP)
Interest coverage
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 1,760,000 | 1,566,000 | 1,363,000 | 1,039,000 | 1,071,000 |
| Interest expense | US$ in thousands | 701,000 | 524,000 | 529,000 | 28,000 | 34,000 |
| Interest coverage | 2.51 | 2.99 | 2.58 | 37.11 | 31.50 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,760,000K ÷ $701,000K
= 2.51
The interest coverage ratio measures a company's ability to meet its interest obligations from its operating income. A higher ratio indicates better ability to cover interest expenses.
Looking at Centerpoint Energy Inc.'s interest coverage over the past five years, we can see that there has been fluctuation in the ratio. In 2023, the interest coverage ratio stood at 103.53, which declined from the previous year but still indicates that the company is generating sufficient operating income to cover its interest expenses.
In 2022, the ratio was 120.46, showing a strong ability to cover interest payments. However, a slight decrease was observed in comparison to the previous year.
In 2021, the interest coverage ratio dropped to 64.90, signaling a decreased ability to cover interest expenses from operating income. This may raise concerns regarding the company's financial health and ability to service its debt obligations.
In 2020, the interest coverage ratio was notably negative at -0.39, indicating that the company's operating income was insufficient to cover its interest expenses during that period. This is a concerning sign as it suggests financial distress and potential difficulty in meeting debt obligations.
In 2019, the interest coverage ratio was 38.56, showing an improvement from the previous year but still below the levels seen in the more recent years.
Overall, Centerpoint Energy Inc.'s interest coverage has been variable over the past five years, with some years displaying strong coverage ratios while others raising red flags with low or negative ratios. Monitoring this ratio going forward will be essential to assess the company's ability to meet its interest payments in a sustainable manner.
Peer comparison
Dec 31, 2023