Avista Corporation (AVA)
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 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 3.06 | 3.10 | 3.18 | 3.18 | 3.15 |
Avista Corporation's solvency ratios, as indicated by the debt-to-assets ratio, debt-to-capital ratio, debt-to-equity ratio, and financial leverage ratio, all show consistent low levels of debt relative to its assets and capital structure over the period from December 31, 2020, to December 31, 2024.
The debt-to-assets ratio measures the proportion of the company's assets financed by debt. Avista Corporation maintained a debt-to-assets ratio of 0.00 throughout the period, indicating that the company did not rely heavily on debt to finance its assets.
Similarly, the debt-to-capital ratio, which expresses the portion of the company's capital that is funded by debt, remained at 0.00 over the five-year period. This suggests that the company's capital structure was primarily composed of equity rather than debt.
The debt-to-equity ratio, a key metric to evaluate the company's financial leverage, also stayed constant at 0.00 throughout the period. This implies that shareholders' equity played a significant role in financing Avista Corporation's operations, with minimal reliance on debt financing.
The financial leverage ratio, which shows the extent to which the company is using debt to support its operations, decreased slightly from 3.15 in 2020 to 3.06 in 2024. Although this ratio decreased, the values remained relatively stable, indicating that Avista Corporation maintained a moderate level of financial leverage while managing its debt levels effectively.
Overall, the consistent low levels of debt across these solvency ratios demonstrate Avista Corporation's prudent financial management and conservative approach to debt financing, which potentially enhances the company's financial stability and resilience in the long term.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 2.26 | 1.98 | 1.68 | 2.22 | 2.24 |
The interest coverage ratio for Avista Corporation has shown some fluctuations in recent years. As of December 31, 2020, the ratio was 2.24, indicating that the company generated 2.24 times the amount of earnings before interest and taxes (EBIT) needed to cover its interest expenses for that year.
Over the subsequent years, the interest coverage ratio experienced some variability. By December 31, 2021, the ratio decreased slightly to 2.22, suggesting a minor decline in the company's ability to cover its interest obligations.
However, by the end of December 31, 2022, the interest coverage ratio dropped further to 1.68, which might signal a potential concern as the ratio falls below 2. This decrease could imply that Avista Corporation's ability to meet its interest payments using its operating income has weakened.
In the following year, the interest coverage ratio improved to 1.98 as of December 31, 2023, indicating a slight recovery in the company's capacity to cover its interest expenses compared to the previous year.
By the end of December 31, 2024, the interest coverage ratio rebounded to 2.26, surpassing the levels from the previous two years. This improvement might indicate a more favorable financial position for Avista Corporation, demonstrating its ability to comfortably meet its interest obligations with its earnings.
In summary, while Avista Corporation's interest coverage ratio has shown fluctuations over the analyzed period, the company's financial health appears to have stabilized as indicated by the improving ratio towards the end of the period.