Southern Company (SO)
Interest coverage
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 7,880,000 | 7,997,000 | 7,701,000 | 6,974,000 | 6,531,000 | 5,774,000 | 5,731,000 | 5,949,000 | 5,828,000 | 5,247,000 | 4,770,000 | 3,953,000 | 4,341,000 | 5,234,000 | 5,432,000 | 5,756,000 | 5,338,000 | 5,200,000 | 5,446,000 | 5,732,000 |
| Interest expense (ttm) | US$ in thousands | 2,744,000 | 2,685,000 | 2,613,000 | 2,529,000 | 2,446,000 | 2,373,000 | 2,264,000 | 2,142,000 | 2,022,000 | 1,946,000 | 1,886,000 | 1,848,000 | 1,836,000 | 1,829,000 | 1,821,000 | 1,815,000 | 1,821,000 | 1,785,000 | 1,776,000 | 1,761,000 |
| Interest coverage | 2.87 | 2.98 | 2.95 | 2.76 | 2.67 | 2.43 | 2.53 | 2.78 | 2.88 | 2.70 | 2.53 | 2.14 | 2.36 | 2.86 | 2.98 | 3.17 | 2.93 | 2.91 | 3.07 | 3.25 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $7,880,000K ÷ $2,744,000K
= 2.87
The interest coverage ratio is a financial metric used to evaluate a company's ability to meet its interest obligations on outstanding debt. It is calculated by dividing a company's earnings before interest and taxes (EBIT) by its interest expenses. In the case of Southern Company, the interest coverage ratio fluctuated over the observed period, ranging from a high of 3.25 in March 2020 to a low of 2.14 in March 2022.
A higher interest coverage ratio indicates that the company is more capable of covering its interest expenses with its earnings. Conversely, a lower ratio may suggest that the company could potentially face challenges in meeting its interest obligations.
Southern Company's interest coverage ratio declined gradually from 3.25 in March 2020 to 2.87 in December 2024, indicating a relative decrease in its ability to cover interest expenses with operating income over the period. It is important for investors and creditors to monitor changes in the interest coverage ratio to assess the company's financial health and its ability to service its debt obligations.
Peer comparison
Dec 31, 2024