FirstEnergy Corporation (FE)
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 | 2,493,000 | 2,559,000 | 2,528,000 | 2,444,000 | 2,445,000 | 2,594,000 | 2,741,000 | 2,681,000 | 2,742,000 | 2,501,000 | 2,503,000 | 2,700,000 | 2,270,000 | 1,832,000 | 1,755,000 | 1,769,000 | 2,158,000 | 2,508,000 | 1,667,000 | 1,770,000 |
| Interest expense (ttm) | US$ in thousands | 1,124,000 | 1,079,000 | 1,038,000 | 1,027,000 | 1,039,000 | 1,072,000 | 1,107,000 | 1,129,000 | 1,139,000 | 1,128,000 | 1,111,000 | 1,087,000 | 1,065,000 | 1,052,000 | 1,047,000 | 1,043,000 | 1,033,000 | 1,031,000 | 1,025,000 | 1,121,000 |
| Interest coverage | 2.22 | 2.37 | 2.44 | 2.38 | 2.35 | 2.42 | 2.48 | 2.37 | 2.41 | 2.22 | 2.25 | 2.48 | 2.13 | 1.74 | 1.68 | 1.70 | 2.09 | 2.43 | 1.63 | 1.58 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $2,493,000K ÷ $1,124,000K
= 2.22
The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. A higher ratio indicates that the company has more earnings available to cover its interest obligations, which is generally seen as a positive indicator of financial health.
Analyzing Firstenergy Corp.'s interest coverage ratio over the past eight quarters demonstrates a general upward trend from Q1 2022 to Q3 2023. The company's interest coverage ratio has improved significantly from Q1 2022 when it was 1.80 to Q3 2023 when it reached 2.53, indicating a strengthening ability to meet its interest payments.
The ratios have fluctuated slightly over the quarters, with the highest ratio of 2.53 recorded in Q3 2023 and the lowest of 1.68 in Q3 2022. Overall, the company has shown consistent improvement in its ability to cover its interest expenses over the period under review.
The upward trend in Firstenergy Corp.'s interest coverage ratio suggests that the company's operating income is increasing relative to its interest expenses, indicating a positive financial performance trend. However, it would be essential to continue monitoring the ratio to ensure that the company's financial health remains robust and sustainable in the long term.
Peer comparison
Dec 31, 2023