Sunrun Inc (RUN)
Interest coverage
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | -3,533,670 | -1,989,300 | -399,128 | -665,076 | -471,320 |
| Interest expense | US$ in thousands | 848,366 | 652,989 | 445,819 | 327,700 | 230,601 |
| Interest coverage | -4.17 | -3.05 | -0.90 | -2.03 | -2.04 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $-3,533,670K ÷ $848,366K
= -4.17
The interest coverage ratio measures the company's ability to cover its interest expenses with its operating income. A higher ratio indicates a stronger ability to meet interest obligations. However, in the case of Sunrun Inc, the interest coverage ratios for the years 2020 to 2024 have been consistently negative.
The negative interest coverage ratios of -2.04, -2.03, -0.90, -3.05, and -4.17 for the years 2020 to 2024 respectively raise concerns about the company's ability to generate enough operating income to cover its interest expenses during these periods. This signifies that Sunrun Inc has been struggling to meet its interest obligations with its operating earnings, which may indicate financial distress or inefficiencies in its operations.
It is crucial for stakeholders, investors, and creditors to closely monitor the trend of Sunrun Inc's interest coverage ratio and understand the factors influencing the negative values. Management should focus on improving profitability and cash flow generation to enhance the company's ability to service its debt and interest payments in the future.
Peer comparison
Dec 31, 2024