Southern Company (SO)
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 | 5,826,000 | 5,370,000 | 3,698,000 | 4,885,000 | 7,736,000 |
| Interest expense | US$ in thousands | 414,000 | 340,000 | 293,000 | 241,000 | 214,000 |
| Interest coverage | 14.07 | 15.79 | 12.62 | 20.27 | 36.15 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $5,826,000K ÷ $414,000K
= 14.07
The interest coverage ratio for Southern Company has shown a slight decline over the past five years, from 3.18 in 2019 to 2.41 in 2023. This indicates that the company's ability to cover its interest payments with its earnings has weakened over the period. Although the ratio remains above 1, suggesting that the company is still generating enough operating income to cover its interest expenses, the downward trend raises some concerns about the company's financial health and its ability to service its debt obligations in the future. It is important for Southern Company to closely monitor its interest coverage ratio and take necessary steps to improve it to ensure long-term financial sustainability.
Peer comparison
Dec 31, 2023