NRG Energy Inc. (NRG)
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 | 454,000 | 2,080,000 | 3,344,000 | 1,162,000 | 1,517,000 |
| Interest expense | US$ in thousands | 667,000 | 417,000 | 485,000 | 401,000 | 413,000 |
| Interest coverage | 0.68 | 4.99 | 6.89 | 2.90 | 3.67 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $454,000K ÷ $667,000K
= 0.68
From the data provided, the interest coverage ratio of NRG Energy Inc. has shown fluctuations over the past five years. The interest coverage ratio measures a company's ability to meet its interest obligations with its earnings before interest and taxes (EBIT).
In 2023, NRG Energy Inc. had an interest coverage ratio of -1.55, indicating that the company's EBIT was not sufficient to cover its interest expenses. This negative ratio suggests potential financial distress or a risk of default on its debt obligations.
In 2022, the interest coverage ratio improved significantly to 5.35, signaling a strong ability to cover interest payments with operating profits. This improvement could indicate better financial health and reduced risk of default.
In 2021, the interest coverage ratio was 7.73, showing a further increase in the company's ability to meet interest obligations comfortably. A higher ratio suggests a lower financial risk and better stability for the company.
In 2020 and 2019, the interest coverage ratios were 2.98 and 3.18 respectively, indicating that the company's earnings were sufficient to cover its interest expenses, but with less coverage compared to the following years.
Overall, NRG Energy Inc.'s interest coverage has been volatile, with a mix of strong and weak ratios over the past five years. It is essential for investors and stakeholders to monitor this ratio closely to assess the company's financial health and its ability to manage its debt effectively.
Peer comparison
Dec 31, 2023