MGE Energy Inc (MGEE)
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 | 146,385 | 137,743 | 117,294 | 109,997 | 110,910 |
| Interest expense | US$ in thousands | 556 | 752 | 771 | 784 | 792 |
| Interest coverage | 263.28 | 183.17 | 152.13 | 140.30 | 140.04 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $146,385K ÷ $556K
= 263.28
The interest coverage ratio for MGE Energy Inc has shown a consistent improvement over the past five years. The ratio has increased from 140.04 in 2019 to 263.28 in 2023, indicating that the company's ability to cover its interest expense has strengthened significantly. This upward trend suggests that MGE Energy Inc has been generating sufficient operating income to comfortably meet its interest obligations, reflecting a favorable financial position and decreasing financial risk over the years. A higher interest coverage ratio is generally perceived positively by investors and creditors as it signifies the company's capacity to service its debt obligations and indicates financial stability and efficiency.