Quanta Services Inc (PWR)
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 | 1,150,870 | 807,795 | 685,773 | 609,996 | 634,406 |
| Interest expense | US$ in thousands | 186,913 | 124,363 | 68,899 | 45,013 | 66,890 |
| Interest coverage | 6.16 | 6.50 | 9.95 | 13.55 | 9.48 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,150,870K ÷ $186,913K
= 6.16
Quanta Services, Inc.'s interest coverage has displayed a fluctuating trend over the past five years. The interest coverage ratio measures a company's ability to meet its interest obligations with its operating income. It is calculated by dividing operating income by interest expense.
In 2023, the interest coverage ratio decreased to 6.44 from 7.32 in 2022, indicating that the company's ability to cover its interest payments with operating income weakened compared to the previous year. Despite this decline, the ratio remains above 1, suggesting that Quanta Services, Inc. still generates sufficient operating income to cover its interest expenses.
When compared to 2021 and 2020, where the interest coverage ratios were 10.29 and 14.58 respectively, the ability of the company to cover its interest payments has decreased significantly. This decline may raise concerns about the company's financial health and its ability to handle its debt obligations.
However, when looking back further to 2019, Quanta Services, Inc. had an interest coverage ratio of 8.83, which is lower than the most recent year but still higher than 1, indicating that the company has historically been able to comfortably cover its interest payments.
Overall, while the recent decrease in the interest coverage ratio is a point of attention, it is crucial to analyze the company's financial position and performance comprehensively to understand the factors contributing to these fluctuations and assess the company's overall financial stability.
Peer comparison
Dec 31, 2023