Pinnacle West Capital Corp (PNW)

Interest coverage

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	1,012,063	1,001,905	971,182	840,715	824,640	787,011	688,321	728,136	731,911	745,177	756,977	812,268	805,310	786,141	811,776	795,264	788,152	769,301	717,583	652,298
Interest expense (ttm)	US$ in thousands	412,601	392,043	369,935	342,559	331,323	313,638	289,314	270,029	255,539	246,576	241,877	237,225	233,262	232,354	230,394	230,757	228,971	225,702	222,863	217,893
Interest coverage		2.45	2.56	2.63	2.45	2.49	2.51	2.38	2.70	2.86	3.02	3.13	3.42	3.45	3.38	3.52	3.45	3.44	3.41	3.22	2.99

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,012,063K ÷ $412,601K
= 2.45

Interest coverage ratio is a financial metric used to assess a company's ability to meet its interest payments on outstanding debt. It is calculated by dividing a company's earnings before interest and taxes (EBIT) by its interest expense.

For Pinnacle West Capital Corp, the interest coverage ratio has displayed some fluctuation over the past few years. As of December 31, 2024, the interest coverage ratio was 2.45, indicating that the company generated earnings 2.45 times higher than its interest expense for that period.

The trend in the interest coverage ratio for Pinnacle West Capital Corp shows a gradual decline from a peak of 3.52 on June 30, 2021, to 2.45 on December 31, 2024. This downward trend could be a cause for concern as it suggests a potential decrease in the company's ability to comfortably cover its interest obligations.

It is important for investors and stakeholders to monitor the interest coverage ratio closely as a declining ratio may signal increased financial risk for the company, particularly in meeting its debt obligations. Management may need to employ strategies to improve profitability or manage debt levels to enhance the company's financial stability.