IDACORP Inc (IDA)
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 | 404,948 | 386,201 | 369,160 | 353,543 | 343,836 |
| Interest expense | US$ in thousands | 116,457 | 89,375 | 86,698 | 87,426 | 86,475 |
| Interest coverage | 3.48 | 4.32 | 4.26 | 4.04 | 3.98 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $404,948K ÷ $116,457K
= 3.48
The interest coverage ratio represents the ability of Idacorp, Inc. to meet its interest obligations with its operating income. A higher interest coverage ratio indicates a company is more capable of servicing its debt.
From the data provided, we observe fluctuations in Idacorp's interest coverage over the past five years. In 2023, the interest coverage ratio was 2.44, slightly higher compared to the prior year. This suggests that the company generated 2.44 times more operating income than the interest expenses for that year, indicating a moderate ability to cover interest payments.
Looking back, we see a downward trend in the interest coverage ratio from 3.20 in 2019 to the current 2.44 in 2023. While the ratios for the past five years are above 1, indicating that Idacorp has been able to meet its interest obligations, the declining trend raises some concerns regarding the company's ability to cover interest expenses with its operating income.
It is essential for investors and stakeholders to closely monitor Idacorp's interest coverage ratio, as a sustained decrease in this ratio could indicate potential financial distress and a higher risk of defaulting on its debt obligations. Further analysis of the company's financial health and operational efficiency would be necessary to understand the underlying reasons for the changing interest coverage ratios.
Peer comparison
Dec 31, 2023