American Water Works (AWK)
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 | 0.48 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.65 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 1.83 |
| Financial leverage ratio | 3.18 | 3.09 | 3.61 | 3.57 | 3.84 |
The solvency ratios of American Water Works indicate a strong financial position with decreasing levels of debt relative to assets, capital, and equity over the years.
- The Debt-to-assets ratio declined from 0.48 in 2020 to 0.00 in the subsequent years, signifying a reduction in the company's reliance on debt to finance its assets.
- The Debt-to-capital ratio also decreased from 0.65 in 2020 to 0.00 in the following years, indicating that the company's debt as a proportion of its total capital has decreased significantly.
- Similarly, the Debt-to-equity ratio dropped from 1.83 in 2020 to 0.00 in the subsequent years, portraying a lower level of debt compared to shareholder equity.
- The Financial leverage ratio, although showing fluctuations, generally remained stable and relatively low over the years, moving from 3.84 in 2020 to 3.18 in 2024, suggesting that the company has been effectively managing its debt levels and leverage.
Overall, American Water Works has showcased a solid solvency position with decreasing debt levels and prudent management of financial leverage, indicating a more financially stable and sustainable business.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 3.28 | 3.27 | 2.94 | 2.97 | 3.06 |
American Water Works' interest coverage has shown a downward trend over the past five years based on the provided data. In particular, the interest coverage ratio decreased from 3.06 in December 2020 to 2.97 in December 2021, further dropping to 2.94 in December 2022. However, there was a slight improvement in December 2023, with the ratio increasing to 3.27, and a similar trend was observed in December 2024, reaching 3.28.
Overall, the decreasing trend in interest coverage from 2020 to 2022 may indicate a potential increase in the company's financial risk or its ability to cover interest payments. However, the slight recovery in 2023 and 2024 suggests a partial improvement in the company's ability to manage its interest obligations. It is important for investors and stakeholders to monitor this ratio closely in the future to assess the company's financial health and stability.