Allete Inc (ALE)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.25 | 0.24 | 0.27 | 0.26 | 0.26 |
| Debt-to-capital ratio | 0.37 | 0.38 | 0.42 | 0.41 | 0.39 |
| Debt-to-equity ratio | 0.60 | 0.61 | 0.73 | 0.69 | 0.63 |
| Financial leverage ratio | 2.37 | 2.54 | 2.67 | 2.65 | 2.46 |
The solvency ratios of Allete, Inc. indicate the company's ability to meet its long-term financial obligations and the extent to which it relies on debt financing.
The debt-to-assets ratio has shown a generally decreasing trend over the past five years, indicating that the company's reliance on debt to finance its assets has slightly decreased. This suggests that Allete, Inc. has been able to manage its debt levels in relation to its total assets efficiently.
The debt-to-capital ratio and debt-to-equity ratio both show a gradual decline over the years, indicating that the company has been reducing its dependency on debt in relation to its total capital and equity. This trend is positive as it shows an improving financial structure with a lower proportion of debt as compared to capital and equity.
The financial leverage ratio, which measures the extent to which the company utilizes debt in its capital structure, also shows a decreasing trend over the years. This indicates that Allete, Inc. is becoming less leveraged and lowering its financial risk by reducing the use of debt in its operations.
Overall, the solvency ratios suggest that Allete, Inc. has been effectively managing its debt levels and gradually improving its financial structure by decreasing its reliance on debt financing. This trend reflects positively on the company's ability to meet its long-term obligations and maintain financial stability.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 4.40 | 3.10 | 3.06 | 2.86 | 3.76 |
The interest coverage ratio for Allete, Inc. has shown some fluctuations over the past five years. The ratio was 2.51 in 2023, an improvement from 2.03 in 2022 but slightly lower than the 2.64 in 2020 and 2.48 in 2021. The highest interest coverage ratio was 3.10 in 2019.
An interest coverage ratio above 1 indicates that the company is generating enough operating income to cover its interest expenses. A higher ratio is generally more favorable as it indicates a stronger ability to meet interest obligations.
Although the recent interest coverage ratio of 2.51 in 2023 shows an improvement from the previous year, it is important to monitor this ratio over time to ensure the company's ability to consistently cover its interest expenses and maintain financial stability.