Southwest Gas Holdings Inc (SWX)
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 | 538,339 | 489,635 | -30,587 | 355,526 | 402,982 |
| Interest expense | US$ in thousands | 297,043 | 292,286 | 242,750 | 119,198 | 111,477 |
| Interest coverage | 1.81 | 1.68 | -0.13 | 2.98 | 3.61 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $538,339K ÷ $297,043K
= 1.81
Interest coverage measures a company's ability to meet its interest obligations based on its earnings. A higher interest coverage ratio indicates a stronger ability to cover interest expenses.
Analyzing Southwest Gas Holdings Inc's interest coverage over the years:
- As of December 31, 2020, the interest coverage ratio was 3.61, indicating that the company generated earnings 3.61 times greater than its interest expenses.
- By December 31, 2021, the interest coverage ratio decreased to 2.98, suggesting a slight decrease in the company's ability to cover its interest payments.
- The ratio took a drastic drop by December 31, 2022, falling to -0.13. This negative ratio implies that the company's earnings were not sufficient to cover its interest expenses, which could raise concerns about its financial health.
- However, there was some improvement by December 31, 2023, with the interest coverage ratio reaching 1.68. Although still below optimal levels, this indicates a partial recovery in the company's ability to meet interest obligations.
- By December 31, 2024, the ratio increased further to 1.81, showing a slight improvement in the company's capacity to cover interest costs, albeit still below the industry benchmarks.
Overall, Southwest Gas Holdings Inc's interest coverage ratio fluctuated over the years, with periods of strength and weakness. Investors and analysts may monitor this ratio closely to assess the company's financial stability and risk levels.
Peer comparison
Dec 31, 2024