Eversource Energy (ES)

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	2,355,170	580,404	2,544,240	2,152,900	2,094,820
Interest expense	US$ in thousands	1,111,340	855,441	678,274	582,334	538,452
Interest coverage		2.12	0.68	3.75	3.70	3.89

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $2,355,170K ÷ $1,111,340K
= 2.12

Interest coverage is a significant financial ratio that reflects a company's ability to meet its interest obligations. For Eversource Energy, the interest coverage ratio has shown variations over the years. In December 31, 2020, the interest coverage ratio was 3.89, indicating that the company generated almost 4 times the earnings needed to cover its interest expenses.

However, the interest coverage ratio decreased to 3.70 in December 31, 2021, and slightly increased to 3.75 in December 31, 2022. These figures still suggest that Eversource Energy had sufficient earnings to cover its interest payments comfortably during these years.

A concerning trend is observed in December 31, 2023, where the interest coverage ratio significantly dropped to 0.68. This indicates that the company's earnings were barely sufficient to cover its interest expenses during that period, raising questions about its financial health and ability to meet debt obligations.

In December 31, 2024, the interest coverage ratio improved to 2.12, but it was still lower than the ratios in the earlier years. It suggests that Eversource Energy's ability to cover interest payments improved from the previous year but remained below the ideal levels seen in 2020 and 2021.

Overall, Eversource Energy's interest coverage ratio has shown fluctuations, with a notable decline in 2023. Investors and stakeholders should closely monitor this ratio to assess the company's ability to manage its debt and interest obligations effectively.