APA Corporation (APA)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.34 | 0.51 | 0.69 | 0.47 |
| Debt-to-capital ratio | 0.00 | 0.68 | 1.09 | 1.23 | 0.72 |
| Debt-to-equity ratio | 0.00 | 2.16 | — | — | 2.63 |
| Financial leverage ratio | 3.58 | 6.31 | — | — | 5.56 |
Based on the provided solvency ratios for APA Corporation over the past five years, we can observe a fluctuating trend in the company's leverage and debt levels.
1. Debt-to-assets ratio:
The debt-to-assets ratio has shown a declining trend from 0.69 in 2020 to 0.34 in 2023. This indicates that the company has been successful in reducing its reliance on debt to finance its assets over the years.
2. Debt-to-capital ratio:
The debt-to-capital ratio has fluctuated significantly, with a peak of 1.27 in 2021 and a low of 0.66 in 2023. This ratio shows the proportion of the company's capital structure that is financed through debt, and the decreasing trend indicates a more balanced capital structure in recent years.
3. Debt-to-equity ratio:
The debt-to-equity ratio has varied drastically, with a high of 12.89 in 2022, suggesting high leverage, and a considerable decrease to 1.95 in 2023. This ratio reflects the company's reliance on debt versus equity for financing, and the recent decrease indicates a more conservative approach to financing.
4. Financial leverage ratio:
The financial leverage ratio has also shown significant fluctuations, with a peak of 31.08 in 2022 and a decrease to 5.74 in 2023. This ratio measures the company's ability to meet its financial obligations and the recent decrease indicates a lower reliance on debt financing.
Overall, the solvency ratios of APA Corporation have shown improvements in managing debt levels and leverage, indicating a more prudent approach to financing and potential enhanced financial stability in recent years. However, it is essential for the company to continue monitoring and managing its debt levels to ensure sustainable growth and financial health.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 12.37 | 18.01 | 6.89 | -16.09 | -5.06 |
The interest coverage ratio is a measure of a company's ability to cover its interest expenses with its operating income. APA Corporation's interest coverage has fluctuated over the past five years. In 2023, the interest coverage ratio improved significantly to 11.32 from 7.33 in 2021. This indicates that the company's operating income is 11.32 times higher than its interest expenses, reflecting a strong ability to meet its interest obligations.
The improvement in 2023 follows a positive trend seen in 2022 when the interest coverage ratio was 15.89, indicating an even stronger ability to cover interest payments. However, it is noteworthy that in 2020 and 2019, APA Corporation had negative interest coverage ratios of -0.12 and 0.98, respectively. A negative interest coverage ratio suggests that the company's operating income was insufficient to cover its interest expenses during those periods.
Overall, the recent improvement in APA Corporation's interest coverage ratio is a positive indicator of the company's financial health and ability to meet its debt obligations. Monitoring this ratio over time can help assess the company's financial stability and risk of default.