GE Vernova LLC (GEV)
Interest coverage
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | — | -32,000 | -2,323,000 | -692,000 |
| Interest expense | US$ in thousands | 120,000 | 71,000 | 151,000 | 172,000 |
| Interest coverage | 0.00 | -0.45 | -15.38 | -4.02 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $—K ÷ $120,000K
= 0.00
Interest coverage is a vital financial ratio that indicates a company's ability to meet its interest payments on outstanding debt obligations.
In the case of GE Vernova LLC, the interest coverage ratios for the past four years are concerning. The ratios for December 31, 2021, December 31, 2022, December 31, 2023, and December 31, 2024, are -4.02, -15.38, -0.45, and 0.00 respectively.
A negative interest coverage ratio, as seen in three out of the four years, indicates that the company's operating income is insufficient to cover its interest expenses. This raises significant concerns about the company's financial stability and its ability to meet its debt obligations.
The drastic decline in the interest coverage ratio from -4.02 in 2021 to -15.38 in 2022 suggests a worsened financial position, which continued to deteriorate in subsequent years. Furthermore, the interest coverage ratio of 0.00 in 2024 indicates that the operating income was just enough to cover the interest expenses, leaving no buffer for unexpected changes or downturns.
Overall, GE Vernova LLC's interest coverage ratios indicate a precarious financial situation, with a persistent inability to generate enough operating income to comfortably meet its interest payments. This raises red flags about the company's financial health and its capacity to manage its debt effectively.
Peer comparison
Dec 31, 2024