Ormat Technologies Inc (ORA)
Interest coverage
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 249,408 | 237,966 | 183,352 | 186,209 | 246,670 |
| Interest expense | US$ in thousands | 134,031 | 98,881 | 87,743 | 82,658 | 77,953 |
| Interest coverage | 1.86 | 2.41 | 2.09 | 2.25 | 3.16 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $249,408K ÷ $134,031K
= 1.86
The interest coverage ratio measures a company's ability to meet its interest payment obligations with its earnings. Looking at the historical data provided for Ormat Technologies Inc, the interest coverage ratio has shown a fluctuating trend over the past five years.
As of December 31, 2020, the interest coverage ratio was 3.16, indicating that the company was generating more than enough operating income to cover its interest expenses. However, the ratio has shown a slight decline in the subsequent years, reaching 2.25 as of December 31, 2021, 2.09 as of December 31, 2022, and then improving to 2.41 as of December 31, 2023.
Notably, the interest coverage ratio dropped to 1.86 by December 31, 2024, which may raise concerns about Ormat Technologies Inc's ability to comfortably cover its interest payments from its operating earnings.
Overall, a declining trend in the interest coverage ratio could suggest potential financial strain and heightened risk associated with the company's debt obligations. It is essential for stakeholders to monitor this ratio closely to assess the company's ability to manage its debt levels and meet interest payments in the future.
Peer comparison
Dec 31, 2024