FirstEnergy Corporation (FE)
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 | 2,493,000 | 2,445,000 | 2,742,000 | 2,270,000 | 2,158,000 |
| Interest expense | US$ in thousands | 1,124,000 | 1,039,000 | 1,139,000 | 1,065,000 | 1,033,000 |
| Interest coverage | 2.22 | 2.35 | 2.41 | 2.13 | 2.09 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $2,493,000K ÷ $1,124,000K
= 2.22
The interest coverage ratio for Firstenergy Corp. has shown some fluctuations over the past five years. The ratio measures the company's ability to cover its interest expenses with its operating income.
In 2023, the interest coverage ratio was 2.38, indicating that the company generated operating income 2.38 times greater than its interest expenses. This could imply that the company was in a relatively stable financial position in terms of servicing its debt obligations.
Comparing this to the previous years, we see that the interest coverage ratio was 2.18 in 2022, 1.73 in 2021, 2.19 in 2020, and 2.61 in 2019. The decreasing trend from 2019 to 2021 raises some concerns as it suggests that the company may have had difficulty meeting its interest payments relative to its operating income during these years.
However, the increase in the interest coverage ratio in 2023 compared to the prior year provides some reassurance that the company's ability to cover its interest expenses improved. It is essential for investors and stakeholders to monitor this ratio closely to ensure that the company can continue to meet its debt obligations comfortably in the future.
Peer comparison
Dec 31, 2023