Sempra Energy (SRE)
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 | 3,710,000 | 4,874,000 | 3,749,000 | 2,615,000 | 5,094,000 |
| Interest expense | US$ in thousands | 629,000 | 1,309,000 | 1,054,000 | 1,198,000 | 1,081,000 |
| Interest coverage | 5.90 | 3.72 | 3.56 | 2.18 | 4.71 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $3,710,000K ÷ $629,000K
= 5.90
The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. Looking at Sempra Energy's interest coverage ratio over the past five years, we observe fluctuations in the company's ability to cover its interest expenses.
As of December 31, 2020, Sempra Energy had an interest coverage ratio of 4.71, indicating that the company generated operating income almost five times its interest expenses. However, by December 31, 2021, this ratio decreased to 2.18, suggesting a decline in the company's ability to cover its interest obligations.
In the subsequent years, Sempra Energy managed to improve its interest coverage ratio, reaching 3.56 by December 31, 2022, and 3.72 by December 31, 2023. These improvements indicate a better ability to meet interest payments compared to the previous year.
By the end of December 31, 2024, Sempra Energy's interest coverage ratio significantly increased to 5.90, signaling a strong improvement in the company's ability to cover its interest expenses with its operating income. This upward trend is generally positive, as it suggests the company is in a better position to handle its debt obligations.
Overall, while there were fluctuations in Sempra Energy's interest coverage ratio over the years, the company showed improvements in its ability to cover its interest expenses, culminating in a strong ratio of 5.90 by December 2024.
Peer comparison
Dec 31, 2024