Entergy Corporation (ETR)

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 2,645,800 2,678,180 1,970,400 2,144,790 2,070,810
Interest expense US$ in thousands 1,203,590 1,006,410 987,818 834,694 785,663
Interest coverage 2.20 2.66 1.99 2.57 2.64

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $2,645,800K ÷ $1,203,590K
= 2.20

Entergy Corporation's interest coverage ratio has shown some fluctuation over the past five years. The ratio was 2.64 in 2020, slightly decreasing to 2.57 in 2021, and then dropping more notably to 1.99 by the end of 2022. However, there was a slight improvement in 2023 with the interest coverage ratio increasing to 2.66, before falling again to 2.20 in 2024.

Overall, Entergy Corporation's interest coverage ratio indicates the company's ability to meet its interest obligations from its operating income. However, the decreasing trend from 2020 to 2022 may raise concerns about the company's ability to comfortably cover its interest expenses. The slight recovery in 2023 followed by a decline in 2024 suggests some volatility in the company's ability to generate enough earnings to cover its interest payments. Monitoring this ratio closely will be crucial to ensure the company's financial health and ability to service its debt obligations effectively.