Name: Interest Coverage

Definition: Interest coverage tells you how easily the company can pay interest on its debt using operating profits. It’s like asking: “Can the company comfortably make its loan payments, or is it barely scraping by?” The higher the ratio, the safer. A very low ratio means debt payments may strain the business, especially if profits drop.

Interpretation:
• In '2021', ELP's interest coverage was 110.29, indicating the firm's ability to meet its interest obligations. Industry average for Electric Utilities: Central in '2021' stood at 2.31.
• In '2022', ELP's interest coverage was 11.32, indicating the firm's ability to meet its interest obligations. The decline from '2021' may indicate some operational or financial challenges. Industry average for Electric Utilities: Central in '2022' stood at 2.41. Industry average increased by 0.11 compared to previous year.
• In '2023', ELP's interest coverage was 28.70, indicating the firm's ability to meet its interest obligations. The increase since '2022' reflects strengthening financial performance. Industry average for Electric Utilities: Central in '2023' stood at 2.52. Industry average increased by 0.10 compared to previous year.
• In '2024', ELP's interest coverage was 39.05, indicating the firm's ability to meet its interest obligations. The increase since '2023' reflects strengthening financial performance. Industry average for Electric Utilities: Central in '2024' stood at 2.65. Industry average increased by 0.13 compared to previous year.
Overall, ELP's interest coverage has been volatile but showed a downward trend over the past 4 years.

Formula: Interest Coverage = EBIT / Interest Expense

Good Range: Minimum 3-5 desirable; below 1 is risky.