PNM Resources Inc (PNM)

Interest coverage

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	231,340	334,610	430,721	424,783	393,760	376,278	345,244	333,055	308,153	309,393	319,026	337,675	307,803	335,682	316,638	134,832	173,095	69,157	57,751	223,390
Interest expense (ttm)	US$ in thousands	190,355	174,605	159,293	142,611	127,908	113,593	102,311	97,213	96,877	98,854	102,873	109,842	114,392	118,016	121,112	119,815	121,015	122,160	122,293	125,823
Interest coverage		1.22	1.92	2.70	2.98	3.08	3.31	3.37	3.43	3.18	3.13	3.10	3.07	2.69	2.84	2.61	1.13	1.43	0.57	0.47	1.78

December 31, 2023 calculation

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

Interest coverage measures a company's ability to meet its interest payments using its operating income. A higher interest coverage ratio indicates that the company is more capable of servicing its debt obligations.

Analyzing PNM Resources Inc's interest coverage over the past eight quarters, we observe a general downward trend. In Q4 2023, the interest coverage ratio was 1.80, the lowest among the reported quarters. This suggests a potential weakening in the company's ability to cover its interest payments using its operating income.

Comparing Q4 2023 to Q1 2022, we see a decrease from 4.09 to 1.80 in the interest coverage ratio. This significant decline indicates a substantial reduction in the company's ability to service its debt obligations over the period.

It is important for stakeholders to monitor this trend closely as declining interest coverage ratios may indicate increasing financial risk for PNM Resources Inc. Management may need to implement strategies to improve operating performance or manage debt levels to enhance the company's ability to cover interest payments and ensure financial stability.