Vistra Energy Corp (VST)
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 | 2,741,000 | -1,209,000 | -1,348,000 | 1,532,000 | 2,015,000 |
| Interest expense | US$ in thousands | 740,000 | 368,000 | 384,000 | 630,000 | 797,000 |
| Interest coverage | 3.70 | -3.29 | -3.51 | 2.43 | 2.53 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $2,741,000K ÷ $740,000K
= 3.70
The interest coverage ratio measures a company's ability to cover its interest expense with its operating income. A higher ratio indicates a stronger ability to meet interest obligations.
For Vistra Corp, the interest coverage ratio has shown significant fluctuations over the past five years. In 2023, the interest coverage improved to 5.10, indicating that the company's operating income was able to cover its interest expense more than five times. This is a positive sign of financial health.
However, in 2022 and 2021, the company experienced negative interest coverage ratios of -2.03 and -3.18, respectively. This indicates that the company's operating income was insufficient to cover its interest obligations during these years, which can be a cause for concern as it may indicate financial distress.
In 2020 and 2019, the interest coverage ratios were 2.99 and 3.42, respectively, showing an improvement from the negative ratios in the previous years but still indicating some vulnerability in meeting interest payments.
Overall, Vistra Corp's interest coverage has been volatile, with the company facing challenges in certain years but showing improvement in others. It is important for the company to continue monitoring and managing its financial position to ensure it can meet its interest obligations consistently.
Peer comparison
Dec 31, 2023