Essential Utilities Inc (WTRG)

Interest coverage

		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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	715,143	711,317	700,285	685,710	689,024	664,663	635,140	626,264	629,709	617,605	622,829	612,850	453,405	412,408	422,363	380,065	336,909	248,288	236,263	241,750
Interest expense (ttm)	US$ in thousands	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	169,793	152,575	132,636	125,383	118,629	111,389	103,385
Interest coverage		2.52	2.55	2.58	2.67	2.89	2.99	2.97	2.97	3.03	2.99	3.05	3.00	2.41	2.43	2.77	2.87	2.69	2.09	2.12	2.34

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $715,143K ÷ $283,362K
= 2.52

Essential Utilities Inc's interest coverage has shown a declining trend over the eight quarters presented in the data table. The interest coverage ratio, which measures the company's ability to meet its interest payments on outstanding debt, decreased from 2.82 in Q4 2022 to 2.47 in Q4 2023. This indicates that the company's operating income is able to cover its interest expenses 2.47 times in the most recent quarter.

Although the interest coverage ratio fluctuated slightly over the quarters, it generally remained above 2.0, suggesting that Essential Utilities Inc has generated sufficient earnings to comfortably cover its interest obligations. However, the downward trend in the ratio may raise concerns about the company's ability to maintain its current level of interest coverage in the future, especially if operating income does not increase or if interest expenses rise significantly.

Overall, while Essential Utilities Inc's interest coverage ratio indicates a reasonable ability to meet interest payments in the short term, stakeholders may want to monitor the trend closely to ensure the company can sustain its debt obligations in the long run.