Otter Tail Corporation (OTTR)

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	401,166	393,551	250,592	150,504	134,880
Interest expense	US$ in thousands	37,677	36,016	37,771	34,447	31,411
Interest coverage		10.65	10.93	6.63	4.37	4.29

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $401,166K ÷ $37,677K
= 10.65

Based on the interest coverage ratios provided for Otter Tail Corporation over the past five years, we observe a fluctuating trend. In 2023, the interest coverage ratio stands at 10.03, showing the company's ability to meet its interest obligations comfortably with its operating income. This is slightly lower compared to the previous year, where the ratio was 10.84.

In 2021, the interest coverage ratio decreased to 6.61 from 4.29 in both 2020 and 2019. This indicates a period of lower earnings relative to interest expenses, which could potentially signal increased financial risk.

Overall, the trend in interest coverage ratios for Otter Tail Corporation shows a general improvement over the past five years, with occasional dips. It is important to closely monitor this ratio in the future to ensure the company maintains a strong ability to cover its interest payments from its operating income.