APA Corporation (APA)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | — | — |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | — | — |
| Financial leverage ratio | 3.67 | 5.74 | 31.08 | — | — |
APA Corporation's solvency ratios reflect a strong financial position with consistently low debt levels relative to its assets, capital, and equity. The Debt-to-assets, Debt-to-capital, and Debt-to-equity ratios show zeros across the years, indicating that the company has no significant debt obligations compared to its total assets, capital, and shareholder equity.
Furthermore, the Financial leverage ratio, which measures the extent to which the company relies on debt financing, shows a significant decrease over the years from 31.08 in 2022 to 3.67 in 2024. This reduction indicates a declining reliance on debt to finance operations, enhancing the company's solvency and financial stability.
Overall, APA Corporation's solvency ratios suggest a conservative and strong financial structure, with little to no financial risk stemming from debt obligations. This bodes well for the company's capacity to meet its financial commitments and weather potential economic challenges.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 5.12 | 9.70 | 18.81 | 5.52 | -10.15 |
Interest coverage is a critical financial ratio that measures a company's ability to meet its interest obligations on outstanding debt. APA Corporation's interest coverage ratio has fluctuated over the years based on the provided data.
At December 31, 2020, the interest coverage ratio was a concerning -10.15, indicating that the company's operating income was insufficient to cover its interest expenses. This may raise red flags about the company's financial health and its ability to service its debt.
By December 31, 2021, the interest coverage ratio improved significantly to 5.52, suggesting that APA Corporation's operating income had increased sufficiently to cover its interest payments. This positive change may indicate improved financial performance and stability.
Subsequently, the interest coverage ratio continued to rise, reaching 18.81 by December 31, 2022. A high interest coverage ratio of this magnitude suggests that the company is comfortably able to meet its interest obligations with its operating income.
However, the ratio decreased to 9.70 by December 31, 2023, and further dropped to 5.12 by December 31, 2024. These declines may raise concerns about APA Corporation's ability to cover its interest expenses, particularly if the trend continues in the future.
In summary, APA Corporation's interest coverage ratio has shown fluctuations over the years, with improvements in some periods and declines in others. It is essential for investors and stakeholders to monitor this ratio closely to assess the company's ability to meet its debt obligations and manage financial risks.