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AEP (American Electric Power Co) Interest Coverage : 1.77 (As of Jun. 2024)


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What is American Electric Power Co Interest Coverage?

Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company's Operating Income by its Interest Expense. American Electric Power Co's Operating Income for the three months ended in Jun. 2024 was $826 Mil. American Electric Power Co's Interest Expense for the three months ended in Jun. 2024 was $-466 Mil. American Electric Power Co's interest coverage for the quarter that ended in Jun. 2024 was 1.77. The higher the ratio, the stronger the company's financial strength is.

Warning Sign:

Ben Graham prefers companies' interest coverage to be at least 5. American Electric Power Co Inc interest coverage is 2.21, which is low.

The historical rank and industry rank for American Electric Power Co's Interest Coverage or its related term are showing as below:

AEP' s Interest Coverage Range Over the Past 10 Years
Min: 2.07   Med: 2.83   Max: 3.91
Current: 2.21


AEP's Interest Coverage is ranked worse than
75.45% of 444 companies
in the Utilities - Regulated industry
Industry Median: 3.7 vs AEP: 2.21

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.


American Electric Power Co Interest Coverage Historical Data

The historical data trend for American Electric Power Co's Interest Coverage can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

Note: For Interest Coverage, "No debt" indicates no long-term debt. An indication of "No Debt" does not necessarily mean that the company has no long-term debt obligations; it could be due to missing data in the quarterly or annual report. Use caution when interpreting this information.

* Premium members only.

American Electric Power Co Interest Coverage Chart

American Electric Power Co Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
Interest Coverage
Get a 7-Day Free Trial Premium Member Only Premium Member Only 2.56 2.56 2.85 2.71 2.07

American Electric Power Co Quarterly Data
Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23 Mar24 Jun24
Interest Coverage Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 1.90 2.88 1.50 2.69 1.77

Competitive Comparison of American Electric Power Co's Interest Coverage

For the Utilities - Regulated Electric subindustry, American Electric Power Co's Interest Coverage, along with its competitors' market caps and Interest Coverage data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


American Electric Power Co's Interest Coverage Distribution in the Utilities - Regulated Industry

For the Utilities - Regulated industry and Utilities sector, American Electric Power Co's Interest Coverage distribution charts can be found below:

* The bar in red indicates where American Electric Power Co's Interest Coverage falls into.



American Electric Power Co Interest Coverage Calculation

Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company's Operating Income (EBIT) by its Interest Expense:

If Interest Expense is negative and Operating Income is positive, then

Interest Coverage=-1* Operating Income /Interest Expense

Else if Interest Expense is negative and Operating Income is negative, then

The company did not have earnings to cover the interest expense.

Else if Interest Expense is 0 and Long-Term Debt & Capital Lease Obligation is 0, then

The company had no debt (1).


Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

American Electric Power Co's Interest Coverage for the fiscal year that ended in Dec. 2023 is calculated as

Here, for the fiscal year that ended in Dec. 2023, American Electric Power Co's Interest Expense was $-1,807 Mil. Its Operating Income was $3,735 Mil. And its Long-Term Debt & Capital Lease Obligation was $38,172 Mil.

Interest Coverage=-1* Operating Income (A: Dec. 2023 )/Interest Expense (A: Dec. 2023 )
=-1*3734.5/-1806.9
=2.07

American Electric Power Co's Interest Coverage for the quarter that ended in Jun. 2024 is calculated as

Here, for the three months ended in Jun. 2024, American Electric Power Co's Interest Expense was $-466 Mil. Its Operating Income was $826 Mil. And its Long-Term Debt & Capital Lease Obligation was $40,487 Mil.

Interest Coverage=-1* Operating Income (Q: Jun. 2024 )/Interest Expense (Q: Jun. 2024 )
=-1*826.4/-465.6
=1.77

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

The higher the ratio, the stronger the company's Financial Strength is.


American Electric Power Co  (NAS:AEP) Interest Coverage Explanation

Ben Graham requires that a company has a minimum interest coverage of 5 with the companies he invested. If the interest coverage is less than 2, the company is burdened by debt. Any business slow or recession may drag the company into a situation where it cannot pay the interest on its debt.

Interest Coverage is an important factor when GuruFocus ranks a company's overage Financial Strength .


American Electric Power Co Interest Coverage Related Terms

Thank you for viewing the detailed overview of American Electric Power Co's Interest Coverage provided by GuruFocus.com. Please click on the following links to see related term pages.


American Electric Power Co Business Description

Address
1 Riverside Plaza, Columbus, OH, USA, 43215-2373
American Electric Power is one of the largest regulated utilities in the United States, providing electricity generation, transmission, and distribution to more than 5 million customers in 11 states. About 42% of AEP's of capacity is coal, with the remainder from a mix of natural gas (27%), renewable energy and hydro (21%), nuclear (8%), and demand response (2%). Vertically integrated utilities, transmission and distribution, and generation and marketing support earnings.
Executives
Antonio P Smyth officer: Executive Vice President 1 RIVERSIDE PLAZA, COLUMBUS OH 43215
Greg B Hall officer: Executive Vice President 1 RIVERSIDE PLAZA, COLUMBUS OH 43215
Daniel G. Stoddard director 5000 DOMINION BOULEVARD, GLEN ALLEN VA 23060
Kate Sturgess officer: Controller, CAO 2244 WALNUT GROVE AVENUE, ROSEMEAD CA 91770
David Matthew Feinberg officer: Senior Vice President C/O ALLEGHENY ENERGY, INC., 800 CABIN HILL DRIVE, GREENSBURG PA 15601
Christian T Beam officer: Executive Vice President 1 RIVERSIDE PLAZA, COLUMBUS OH 43215
Nicholas K Akins officer: Executive Vice President AMERICAN ELECTRIC POWER COMPANY, INC., 1 RIVERSIDE PLAZA, COLUMBUS OH 43215
Ann P Kelly officer: Executive Vice President & CFO 460 NORTH GULPH ROAD, KING OF PRUSSIA PA 19406
Peggy Simmons officer: Executive Vice President 212 E 6TH ST, TULSA OK 74119
Raja Sundararajan officer: Executive Vice President 1 RIVERSIDE PLAZA, COLUMBUS OH 43215
Donna James director ONE MIRANOVA PLACE, SUITE 1040, COLUMBUS OH 43215
Therace Risch officer: Senior Vice President 6501 LEGACY DRIVE, PLANO TX 75024
Charles E Zebula officer: Executive Vice President 1 RIVERSIDE PLAZA, COLUMBUS OH 43215
Paul Iii Chodak officer: Executive Vice President 1 RIVERSIDE PLAZA, COLUMBUS OH 43215
Julia A Sloat officer: Executive VP, CFO 1 RIVERSIDE PLAZA, COLUMBUS OH 43215