PPL Corporation (PPL)
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 | 1,590,000 | 1,470,000 | -59,000 | 2,417,000 | 2,550,000 |
| Interest expense | US$ in thousands | 666,000 | 513,000 | 918,000 | 634,000 | 621,000 |
| Interest coverage | 2.39 | 2.87 | -0.06 | 3.81 | 4.11 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,590,000K ÷ $666,000K
= 2.39
The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt. A higher interest coverage ratio indicates that the company is more capable of meeting its interest obligations.
Looking at PPL Corp's interest coverage over the past five years, we observe fluctuations in the ratio. In 2023, the interest coverage ratio stood at 2.57, which was slightly lower compared to the previous year but still above 2. This indicates that PPL Corp's operating income was able to cover its interest expenses approximately 2.57 times.
In 2022, the interest coverage ratio was 2.70, showing a slightly higher ability to cover interest expenses compared to 2023. However, in 2021, the ratio dropped to 1.57, which is a cause for concern as it indicates a lower ability to cover interest expenses.
The year 2020 saw a higher interest coverage ratio of 2.83, indicating an improvement in the company's ability to meet its interest obligations. Similarly, in 2019, the interest coverage ratio was 2.90, showing a relatively stable performance in covering interest expenses.
Overall, the trend in PPL Corp's interest coverage ratio has been somewhat inconsistent over the past five years. It is important for investors and creditors to closely monitor this ratio to assess the company's financial health and debt repayment capacity.
Peer comparison
Dec 31, 2023