PNM Resources Inc (PNM)

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	231,340	393,760	308,153	307,803	173,096
Interest expense	US$ in thousands	190,355	127,908	96,877	114,392	121,016
Interest coverage		1.22	3.08	3.18	2.69	1.43

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $231,340K ÷ $190,355K
= 1.22

The interest coverage ratio for PNM Resources Inc has exhibited some variability over the past five years. In 2023, the ratio was 1.80, indicating that the company generated 1.80 times the amount of operating income relative to its interest expenses. This represents a decrease from the previous year, when the interest coverage ratio was 3.53.

While the 2023 ratio of 1.80 is lower than in recent years, it is important for investors and creditors to note that PNM Resources Inc may be at higher risk of financial distress as a lower interest coverage ratio suggests the company may have difficulty meeting its interest obligations. Monitoring this ratio over time is crucial to assess the company's ability to service its debt and manage financial risks effectively.