TXNM Energy, Inc. (TXNM)

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	508,306	280,884	341,319	343,626	325,281
Interest expense	US$ in thousands	228,066	190,355	127,908	96,877	114,392
Interest coverage		2.23	1.48	2.67	3.55	2.84

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $508,306K ÷ $228,066K
= 2.23

TXNM Energy, Inc.'s interest coverage ratio has fluctuated over the past five years. In December 2020, the ratio was 2.84, indicating that the company's operating income was able to cover its interest expense 2.84 times. This ratio improved in December 2021 to 3.55, suggesting better financial health and a stronger ability to meet interest obligations.

However, the trend reversed in December 2022, with the interest coverage dropping to 2.67. While still above 1, which generally signals that the company is capable of meeting its interest payments, the decrease may raise concerns about the company's ability to service its debt. In December 2023, the ratio decreased further to 1.48, indicating a significant decline in the company's ability to cover its interest expenses.

Although there was a slight improvement in December 2024 with an interest coverage ratio of 2.23, the overall trend shows some inconsistency in the company's ability to generate enough operating income to cover its interest payments. TXNM Energy, Inc. should closely monitor its interest coverage ratio to ensure it maintains a healthy level of financial stability and to avoid potential liquidity issues in meeting interest obligations.