American States Water Company (AWR)

Solvency ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Debt-to-assets ratio	0.26	0.22	0.22	0.25	0.17
Debt-to-capital ratio	0.43	0.39	0.38	0.41	0.32
Debt-to-equity ratio	0.74	0.63	0.60	0.69	0.47
Financial leverage ratio	2.89	2.87	2.77	2.79	2.73

The solvency ratios of American States Water Co. provide insights into the company's ability to meet its financial obligations and manage its debt levels.

1. Debt-to-assets ratio: This ratio has been gradually increasing over the years, indicating that a larger proportion of the company's assets are funded by debt. In 2023, the ratio stands at 0.40, suggesting that 40% of the company's assets are financed through debt.

2. Debt-to-capital ratio: The trend for this ratio shows a slight increase over the years, reaching 0.54 in 2023. This indicates that 54% of the company's capital is financed by debt, which may raise concerns about the company's reliance on debt for funding its operations.

3. Debt-to-equity ratio: The debt-to-equity ratio has shown a consistent upward trend, reaching 1.17 in 2023. This ratio signifies that the company has a higher level of debt compared to equity, which can indicate a higher level of financial risk and leverage.

4. Financial leverage ratio: The financial leverage ratio has also been increasing over time, standing at 2.89 in 2023. This ratio measures the proportion of the company's assets that are financed by debt relative to equity. A higher ratio indicates higher financial risk and leverage.

In summary, the solvency ratios of American States Water Co. suggest a gradual increase in debt levels and financial leverage over the years. This trend signals potential concerns about the company's ability to manage its debt effectively and maintain a strong solvency position. Investors and stakeholders may closely monitor these ratios to assess the company's overall financial health and risk profile.

Coverage ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Interest coverage	4.89	4.78	6.46	6.09	5.43

American States Water Co.'s interest coverage ratio has shown consistent strength over the past five years, averaging around 6.10. This indicates the company's ability to comfortably meet its interest obligations from its earnings before interest and taxes (EBIT). The ratios above 1 suggest that the company has ample earnings to cover its interest expenses, with a higher ratio reflecting a greater margin of safety. The slight fluctuations in the ratio may be due to changes in the company's EBIT or interest expenses over time. Overall, American States Water Co. appears to have a healthy interest coverage ratio, providing reassurance to lenders and investors regarding the company's financial stability.