Essential Utilities Inc (WTRG)

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	778,424	720,800	696,803	702,447	704,030	700,204	690,732	675,269	674,976	647,479	622,251	613,026	615,093	601,691	603,509	595,346	459,217	411,259	413,564	382,718
Interest expense (ttm)	US$ in thousands	302,467	296,086	287,830	283,967	283,362	279,211	271,109	257,148	238,116	222,117	213,761	210,576	207,709	206,722	204,451	204,081	188,434	169,791	152,573	124,216
Interest coverage		2.57	2.43	2.42	2.47	2.48	2.51	2.55	2.63	2.83	2.92	2.91	2.91	2.96	2.91	2.95	2.92	2.44	2.42	2.71	3.08

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $778,424K ÷ $302,467K
= 2.57

Essential Utilities Inc's interest coverage ratio has shown a declining trend over the past five years, starting at 3.08 in March 2020 and decreasing to 2.57 by December 2024. The interest coverage ratio represents the company's ability to pay its interest expenses with its earnings before interest and taxes. A higher interest coverage ratio is generally preferred as it indicates the company is more capable of meeting its interest obligations.

Essential Utilities Inc's interest coverage ratio remaining above 2 indicates that the company is still generating enough earnings to cover its interest expenses. However, the decreasing trend in the ratio over time may suggest that the company's ability to cover its interest costs is weakening. It would be prudent for stakeholders to closely monitor this ratio to ensure the company's financial health and ability to meet its debt obligations.