Sunrun Inc (RUN)
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 | -1,978,640 | -662,192 | -666,187 | -465,108 | -215,740 |
| Interest expense | US$ in thousands | 3,291 | 3,385 | 958 | 109,669 | 1,915 |
| Interest coverage | -601.23 | -195.63 | -695.39 | -4.24 | -112.66 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $-1,978,640K ÷ $3,291K
= -601.23
Interest coverage is a key financial ratio that indicates a company's ability to cover its interest payments with its operating income. A higher interest coverage ratio implies that the company is more capable of meeting its interest obligations.
In the case of Sunrun Inc, the interest coverage ratio has been fluctuating over the past five years, ranging from -2.03 in 2021 to -1.24 in 2019. A negative interest coverage ratio indicates that the company's operating income is not sufficient to cover its interest expenses, which raises concerns about its financial health and ability to meet debt obligations.
The declining trend in the interest coverage ratio from 2021 to 2023 suggests that Sunrun Inc may be facing challenges in generating enough operating income to cover its interest payments. Investors and creditors may consider this trend a red flag, as it indicates a higher risk of default on debt obligations.
It is crucial for Sunrun Inc to improve its interest coverage ratio by either increasing its operating income, reducing its interest expenses, or a combination of both. Monitoring this ratio over time will be essential in assessing the company's financial performance and risk management capabilities.
Peer comparison
Dec 31, 2023